A stronger-than-expected US private-sector jobs report briefly helped the dollar pare losses versus the euro and extend gains against the yen. But those moves were short lived.
"The market quickly faded the mini-rally in the dollar as the trend gave way to what we have been seeing for the past several weeks, which is dollar weakness," said Sireen Harajli, currency strategist at Mizuho Corporate Bank in New York.
She added that while the ADP number was better than forecast and will probably lead to high expectations for the US non-farm payrolls report on Friday, the market does not seem to be willing to push the dollar higher. US private employers added 250,000 jobs in December, data from ADP Research Institute showed, the biggest monthly increase since March. Economists surveyed by Reuters had forecast a gain of 190,000 jobs, with estimates ranging from 165,000 to 225,000.
The dollar index, which measures the currency against a basket of six major rivals, had slipped to its lowest since Sept. 20 on Tuesday, as optimism about the euro zone economy drove the single currency above $1.20 for the first time in 3-1/2 months. The index was last down 0.2 percent at 91.939.
The dollar had bounced on Wednesday after strong manufacturing and construction data. It drew further support from the Fed's latest minutes, which indicated the US central bank is still poised to raise interest rates several times this year.
"We have decent expectations for global growth and global risk assets and, when you have above-potential global growth, the dollar tends to weaken because people don't need to hold safe-haven dollars," said BMO Capital Markets currency strategist Stephen Gallo in London.
The dollar rose against the yen, however, trading up 0.2 percent at 112.77 yen on strong risk appetite across markets.
After dipping in early trade in Asia, reaching as low as $1.2005, the euro bounced back to trade as high as $1.2075 . The euro last changed hands at $1.2062, up 0.4 percent
Bitcoin was down about 4 percent on the Bitstamp exchange at around $14,529, having lost more than a quarter of its value since hitting record highs in mid-December.