The dollar was narrowly mixed on Wednesday in thin, mostly technically driven-trading, gaining some momentum after an above-consensus gauge of US consumer confidence in December.
The rise in the US consumer confidence index this month as measured by the Conference Board, a private business group, helped the dollar retrace earlier losses against the euro.
The index climbed to 103.6 from a revised 98.3 in November. Economists had expected a reading of 101.8.
In late trading in New York, the euro was flat on the day at $1.1836, and nearly a cent off session highs of $1.1932.
"We're still in a range especially in euro/dollar between $1.17-$1.20 and any time it approaches the extreme ends of that range, the market corrects," said Joe Francomano, vice president of foreign exchange, at Erste Bank in New York.
Traders had sold the dollar against the euro earlier in the European session on a robust German consumer sentiment report. But the thin volume and a lack of interest to maintain major positions as the end of the year nears laid the ground for sharper moves later.
The dollar was up 0.4 percent against the yen at 117.87 yen, and recovered from lows against the Swiss franc to trade slightly down on the day at 1.3164 francs. Sterling was 0.6 percent weaker at $1.7164.
Stop-loss orders were triggered in euro/dollar, sterling/dollar and dollar/yen after support and resistance levels failed to hold.
Traders also said the dollar's sudden rebound was driven by order flows that likely came from corporate accounts executing last-minute business rather than traders or investors, most of whom have closed their books for the year.
It was a different story for the dollar, however, earlier in the global session.
The German GfK market research group's forward-looking gauge of Germany's consumer sentiment rose more than expected to 3.8 for January after a revised 3.4 in the previous month.
The GfK survey helped push the euro up through $1.19 in European trading. It rarely has a significant impact on markets but thin trading volumes and liquidity exaggerated the move, analysts said. Pushed higher by the British pound's fall against the dollar, euro/sterling touched a new four-month high of 69.06 pence.
Meanwhile, the yield on benchmark 10-year US Treasuries dipped below that of two-year notes again on Wednesday, a day after the first yield-curve inversion since December 2000.
Inversions have typically signalled a slowing economy, and some traders said the curve could lead to a decrease in capital flows to the United States. But some analysts have said such worries were not warranted, noting that inversions do not always herald an economic slowdown.
"The reason why an inverted yield curve need not foreshadow recession this time is that it is foreign investors and not domestic investors who are increasingly buyers of US bonds," said Michael Woolfolk, senior currency strategist at Bank of New York.