The dollar fell after the commerce department said US retail sales unexpectedly fell by 0.3 percent in June, missing economists' expectations for a 0.2 per cent rise.
Additionally the retail sales figure for May was revised down by 0.2 per cent to show one per cent growth, down from the 1.2 per cent initially reported.
This sent the greenback lower against the euro as the EUR/USD exchange rose 0.63 per cent to $1.1065.
The disappointing reading could skew policymakers at the Federal Reserve against a September rate hike. Minutes from its June 16-17 meeting showed officials want further evidence that the economy is picking up before they end a policy of zero interest rates.
"Unexpectedly weak retail sales data adds to signs that the US economy is slowing again after pulling out of the soft patch earlier in the year. Any signs of slower growth could easily dissuade the Fed from hiking interest rates later this year, pushing the first rate rise into 2016," Chris Williamson, chief economist at Markit, said.
"Despite the downturn in June, sales rose 1.5 per cent in the second quarter after a 1.0 per cent decline in the first quarter, with core sales up 1.0 per cent after a meagre 0.3 per cent in the first three months of the year."
"The data therefore support the view that the economy will have grown quite impressively in the second quarter, with gross domestic product up by around 2.5 per cent on an annualised basis, but the worry is that this to a large extent merely reflects a rebound from the weather-related slump in the first quarter."