The dollar remained close to session lows against a basket of global currencies on Friday after the release of disappointing economic data weighed on sentiment.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, fell by 0.34% to 97.18.
U.S. homebuilding fell for a third straight month in May to the lowest level in eight months, suggesting that subdued housing activity could dent economic growth in the second quarter.
Housing starts dropped 5.5% to a seasonally adjusted annual rate of 1.09 million units, the Commerce Department said on Friday, well below forecasts of a 4.1% increase.
In a separate report, the University of Michigan said its consumer sentiment gauged fell to 94.5 in early June from 91.1 in May. Analysts had expected a reading of 97.1.
The slowdown in the housing sector comes a few days after the Federal Reserve raised interest rates for the second time this year, and said gradual interest rate increases remained appropriate, asserting that moderate economic growth will continue for foreseeable future.
The pound and euro were the main beneficiaries of the slump lower in the greenback.
GBP/USD rose to $1.2763, up 0.22%, underpinned by expectations that the Bank of England could alter its stance on low interest rates in the near future, after an increasing number of its members voted in favour of an interest rate increase on Wednesday.
EUR/USD added 0.39% to $1.1190 while EUR/GBP rose by 19% to 0.8753.
USD/CAD traded at C$1.3230, down 0.29%, as a rebound in oil prices supported upward momentum in the oil-linked Canadian dollar.
The yen was one of the few major currencies unable to take advantage of the weaker greenback, hitting a two-week low, after the Bank of Japan kept interest rates unchanged and hinted that ultra-loose monetary policy could remain in place for a while.
Governor Haruhiko Kuroda said there was "some distance" to achieving the BOJ's inflation target of 2%, adding that it was "inappropriate" to say how the Bank would exit its massive stimulus program.
USD/JPY traded roughly flat at Y110.84.