The U.S. dollar declined against its major counterparts in the Asian session on Thursday, as treasury yields fell on weak U.S. housing market data and worries about U.S.-China trade talks.

The benchmark yield on 10-year note fell 2.05 percent, while that of 30-year equivalent was down by 2.56 percent. Yields move inversely to bond prices.

Overnight data showed that U.S. housing starts logged a bigger than expected decrease in June.

Housing starts dropped to an annual rate of 1.253 million in June after slipping by 0.4 percent to a revised rate of 1.265 million in May.

The report also showed that U.S. building permits fell to the lowest level since mid-2017 in June, dropping 6.1 percent to 1.22 million.

Trade concerns flared up after the Wall Street Journal reported that U.S-China trade talks were deadlocked over restrictions on Huawei.

The currency was further weighed by the IMF's assessment suggesting that the currency was overvalued by 6 percent to 12 percent, based on near-term economic fundamentals.

Investors focus on the release of Philly Fed Manufacturing Index and the weekly jobless claims data for more direction.

The greenback declined to 2-day lows of 1.1244 versus the euro and 0.7039 versus the aussie, from its early highs of 1.1224 and 0.7005, respectively. If the greenback extends drop, 1.15 and 0.715 are seen as its next support levels versus the euro and the aussie, respectively.

Pulling away from its previous highs of 1.2422 against the pound and 0.9874 against the franc, the greenback weakened to 2-day lows of 1.2472 and 0.9848, respectively. The greenback is seen finding support around 1.27 against the pound and 0.96 against the franc.

The greenback slipped to a new 2-week low of 107.62 against the yen, from a high of 107.98 it touched at 7:00 pm ET. The greenback is poised to challenge support around the 106.00 level.

Data from the Ministry of Finance showed that Japan posted a merchandise trade surplus of 589.5 billion yen in June.

That exceeded expectations for a surplus of 403.5 billion yen following the 968.3 billion yen deficit of May.

The U.S. currency slipped to a session's low of 0.6747 against the kiwi, following a high of 0.6724 seen at 5:00 pm ET. On the downside, 0.69 is likely seen as the next support for the greenback.

In contrast, the greenback bounced off to 1.3060 against the loonie, from a low of 1.3042 hit at 11:30 pm ET. Next key resistance for the greenback is seen around the 1.32 region.

Looking ahead, U.K. retail sales for June are due in the European session.

In the New York session, U.S. weekly jobless claims for the week ended July 13 and leading indicator for June are set for release.

Federal Reserve Bank of New York President John Williams will speak about monetary policy at the Annual Meeting of the Central Bank Research Association in New York at 2:15 pm ET.

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