The dollar pared gains on Wednesday, retreating from a 14-year-high after weak home-sales data.
The WSJ Dollar Index, which measures the U.S. currency against 16 others, rose 0.1% to 93.48. Earlier in the day, the index hit its highest level since 2002. Trading has been thin this week due to the holidays, likely exacerbating market moves.
The National Association of Realtors’ gauge of pending home sales dropped in November, a sign of weakening momentum for the U.S. housing market heading into 2017.
Still, other U.S. economic data this week was strong, with reports showing rising home prices and consumer confidence.
The dollar has surged over the past two months, supported by President-elect Donald Trump’s policy proposals and the Federal Reserve’s more hawkish interest-rate outlook.
Sireen Harajli, an analyst at Mizuho Bank, expects the dollar rally to slow in the first quarter of 2017 as the U.S. legislative process begins to take shape.
“The recent gains in yields and the U.S. dollar are largely based on expectation and are subject to the risk of a correction” if Mr. Trump’s administration fails to deliver its policy proposals, said Ms. Harajli in a research note.
Meanwhile, the euro slid 0.5% against the dollar to $1.0408. The European Central Bank this week warned that Italian lender Monte dei Paschi di Siena has a far bigger hole in its balance sheet than previously calculated.