European stock markets rebounded, while oil prices steadied.

"Today the focus shifts to the health of the US economy, with US GDP data for December," said Miles Eakers, analyst at forex group Centtrip.

"Should the data look dreary, the dollar's woeful start to 2018 is likely to continue."

Foreign exchange markets have been on a roller-coaster ride the past few days after US Treasury Secretary Steven Mnuchin sent the dollar spiralling to three-year lows against the euro by saying at the Davos meeting of business and political leaders that a weaker unit was good for US trade.

That came as Commerce Secretary Wilbur Ross defended this week's stinging US tariffs on solar panels and warned of further retaliation against nations Washington felt had broken the rules, ramping up fears of a possible global trade war.

Traders rushed back into the dollar, though, after Trump, who arrived at the Swiss resort on Thursday, restated traditional US policy of favouring a strong dollar and said Mnuchin's comments were taken out of context.

However, the recovery soon faded and dollar-selling resumed, with the euro heading back towards a three-year high, helped by European Central Bank boss Mario Draghi who showed little concern about the effect of a stronger unit on the eurozone.

- Weaker narrative -

But Draghi did voice concern over the "volatility" in currency markets. He spoke after the ECB left its bond-buying stimulus for the eurozone in place.

"The euro-buying sentiment is expected to stay strong as investors are convinced that the EU remains on course for (monetary) normalisation this year," Masakazu Satou, analyst at Gaitame Online told AFP, referring to a wind-down of the crisis-era stimulus.

And Stephen Innes, head of Asia-Pacific trading at OANDA, said the greenback could see more losses owing to Trump's desire to help US manufacturers and exporters as part of his America First policy.

"It's obvious to anyone that the US administration trade policy would benefit from the weaker dollar policy, but I suspect Trump's latest... comments are more about optics and little more than a case of temporarily taming the dollar bear ahead of his Davos speech" on Friday, he said.

"The weaker dollar narrative remains intact for 2018."