The dollar index, which measures the greenback against six rival currencies, was little changed at 93.824.

The index, which slipped as low as 93.813 on Wednesday, its lowest since Oct. 20, recovered some ground as global markets showed a recovery in risk appetite.

The index pared some early gains after data showed the number of Americans filing for unemployment benefits unexpectedly rose last week.

"Some of the selling pressure on the dollar seems to have abated a little bit. We are seeing a slightly less negative mood in global financial markets," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Investors tentatively returned to stock markets around the world looking for bargains on Thursday.

"We are also seeing some of the steam come out of the euro's rally," Esiner said.

The euro, which soared on Wednesday after data showed the German economy shifted into a higher gear in the third quarter, has given up some of those gains.

Dollar bulls have been encouraged by upbeat data on underlying inflation in the United States.

"All things being equal, the news that we saw this week does little to change the broader outlook for the US Federal Reserve to far outpace the European Central Bank in policy normalization for the foreseeable future," Esiner said.

The euro was 0.12 percent lower at $1.1777.

The Republican-controlled US Congress was approaching a major test on Thursday of its ability to overhaul the federal tax code, as lawmakers prepared for their first full-scale vote on sweeping tax legislation.

Republicans in the House of Representatives were expected to take up their bill to cut federal tax rates on corporations, small businesses and individuals after an 11:30 a.m. (1630 GMT) meeting with President Donald Trump.

But Trump's tax reform hopes have begun to encounter resistance in the Senate. That chamber's version of the tax bill has faced criticism from some Republican lawmakers.

"One of the biggest headwinds for the dollar is the uncertainty surrounding tax reform," said Esiner.

Sterling was up 0.24 percent against the dollar to $1.32, after marginally better-than-expected retail sales data, even as investors kept an eye on uncertainty around Brexit negotiations.