The dollar slipped against the euro on Thursday after a report showed April capital flows into the United States, which dropped sharply, were not enough to cover the trade deficit.
A mixed bag of U.S. economic data left traders with no clear direction and most said orders to buy dollars were being met with just as many to sell. However, against a basket of major currencies, the dollar remained within striking distance of seven-week highs reached on Tuesday.
Foreign investment in U.S. assets in April, particularly from private investors, was the lowest in more than a year and unable to offset that month's trade deficit for the first time since December 2005.
"To the extent the private sector suddenly decided they didn't want U.S. securities that meant there were more dollars available on the foreign exchange market and that meant downward pressure on the dollar," Chris Probyn, chief economist with State Street Global Advisors in Boston, said.
By 1:00 p.m. (1700 GMT), the euro was at $1.2615, up 0.1 percent from Wednesday but off session highs of $1.2658 . On Tuesday the euro hit a 1-1/2 month low of $1.2528.
The dollar held steady at 115.06 yen , within sight of seven-week highs of 115.44 yen touched on Tuesday.
Weakness in the dollar for the second consecutive session was striking especially since the futures market reflected increased chances of two more rate hikes by the Federal Reserve later this month and in August.
