NEW YORK (AP) - The dollar was down sharply against its major counterparts Thursday as disappointing U.S. retail sales ignited another sell-off of dollars, erasing overnight gains against its rivals.

After the dollar rallied briefly in early morning trading, it fell sharply allowing the euro to hit a new one-year high at $1.2873. The British pound crossed the $1.88 mark to peak at fresh one-year top at $1.8853, and the dollar dropped as far as 1.2088 Swiss francs. The dollar also lost ground against the yen, though it remained ahead of levels from late Wednesday.

Late afternoon in New York, the euro was trading at 1.2839 from $1.2796 late Wednesday according to EBS. The dollar was at Y110.63 from Y110.36 late Wednesday. The euro was around Y141.84 from Y141.24, and the dollar was quoted at CHF1.2155 from CHF1.2174 late Wednesday. Sterling was trading at $1.8792 from $1.8666.

The dollar's decline came largely from technical trading, as investor mired in a dollar bearish environment probed the limits of the ranges for various currency pairs.

"(The data) just gave dollar bears all the momentum they needed to continue the trend," said Tim Mazanec, senior currency strategist at Investors Bank and Trust. "Even if you disagree with this trend, you're not going to get in the way of it."

Mazanec said that although some of the movement was based on fundamentals, "there is no doubt that a significant portion of this rally has been fed by momentum."

Though retail sales increased by a seasonally adjusted 0.5 percent for April, the figures were down from expectations of 0.8 percent and below an unrevised 0.6 percent in March. Analysts also noted that a large part of those sales were due to higher gas prices, causing the market to take an even more bearish interpretation of the data.

"The fact that a lot of it was gasoline-station-related is unhelpful," said Robert Lynch, currency strategist at HSBC in New York.

The disappointing retail sales figures were the first data the market has seen in the wake of the Fed's policy statement, which also helped ignite the dollar's decline. The Fed is considered to be data dependent, with future policy decisions hinging on the trend for the U.S. economy.

Comments from European Central Bank governing council member Axel Weber also added to the dollar's bleak performance Thursday.

"While it is true that current long-term inflation expectations are compatible with the Eurosystem's definition of price stability, this argument can't be used to justify a monetary policy of 'wait-and-see'," Weber said in the text of a speech presented in Dublin. Weber is also President of Deutsche Bundesbank, the German central bank

His comments added to a host of recent warnings from ECB members about the central bank's aversion _ and its willingness to act in response _ to inflationary pressure.

Though the dollar had strengthened overnight following the Federal Reserve's policy statement and the Treasury's decision not to name China a currency manipulator, analysts had expected the recovery would be short-lived.

Advancing energy and metal prices, particularly gold, also put pressure on the greenback. The yellow metal was trading Thursday at levels not seem since the early 1980s, while the June contract for oil was trading over $72 a barrel.

Policymakers' renewed focus on structural imbalances has weighed on the dollar for several weeks, and markets will scrutinize Friday's trade balance figures. The data, due out at 8:30 a.m. EDT (1230 GMT) is expected to show a U.S. trade deficit of $67.5 billion (?53.08 billion).

Most analysts expect that any positive dollar reaction to the data will be muted, given the market's bearish attitude toward the U.S. currency. Others are even more skeptical.

"Even an as-expected number should be negative for the dollar," Lynch said.