The dollar plunged versus the euro on Tuesday hitting the pivotal $1.30 mark for the first time in two months.
It was a rough day all around for the dollar, which dropped to a fresh 15-year low against the yen after Japanese Prime Minister Naoto Kan won a power struggle within his political party.
Kan is seen as reluctant to intervene to stop the yen’s rapid rise.
Against the yen, the dollar fell through support to hit levels not seen since 1995. The buck dropped to 82.91 before stabilizing.
The dollar dropped to 1.3025 versus the euro, its lowest since early July. Canada’s loonie also hammered the dollar, which slipped to C$1.0215 before seeing a modest improvement.
The dollar was battered by the sterling, hitting 1.5570 by mid-day.
Traders weighed a pair of encouraging economic reports against talk of the Federal Reserve ramping up its asset purchases.
US business inventories rose at the fastest pace in two years, and retail sales picked up for the back-to-school shopping season.
The Commerce Department said inventories rose 1.0 percent to $1.38 trillion, after increasing by a revised 0.5 percent in June. Businesses are re-stocking shelves in anticipation of a sustained US recovery.
The sentiment was boosted by data showing sales at retail store posted their largest gain in five months in August.
Total retail sales rose 0.4 percent following a revised 0.3 percent rise in July.