After strong services sector and jobs data, Powell said the Fed may raise interest rates above an estimated "neutral" level.

Higher US interest rates make assets in emerging markets relatively less attractive.

The forint led currency losses in Central Europe.

It shed 0.4 percent, to trade at 323.7 against the euro at 0801 GMT, while the crown shed 0.2 percent and the zloty 0.1 percent.

The forint gave up some of its gains of recent weeks versus regional peers, retreating from 1-and-1/2-month highs set against both the euro and the zloty on Wednesday, and from the proximity of 2-month highs versus the crown.

In a Reuters poll of analysts conducted before the US data, analysts predicted a 3 percent gain for the crown against the euro in the next 12 months, driven by expected further Czech central bank rate hikes, and about one percent forint and zloty firming.

According to a separate survey, the dollar could firm slightly further, to $1.14 versus the euro in the next three months but shed 6 percent in a year.

The dollar traded at 1.1485 against the euro on Thursday, and investors pondered if the US news could change the longer-term market outlook.

"It is hard to say if we can expect a change in market trends," one Budapest-based fixed income trader said. "Anyway, 10 basis point movements in core market (US) yields are rare, and we are obviously tracking it," the trader added.

The US 10-year Treasury yield retreated by about 5 basis points by Thursday after an overnight spike to 3.2325 percent, its highest level since 2011.

But euro zone and Central European bond yields rose.

Medium- and long-term yields in Budapest and Warsaw rose by about 5 basis points, with Hungary's 10-year bond trading at 3.63 percent and its Polish peer at 3.31 percent, its highest level since May.

In stock markets, Budapest's main index dropped 0.6 percent, retreating from Wednesday's 4-week highs, and Warsaw shed 0.8 percent.

Prague's main equities index resisted, rising a quarter of a percent, driven by a 1.5 percent rise in the stocks of Austria-based bank Erste.

Elsewhere, Serbia's dinar firmed slightly to 118.52 against the euro.

The Serbian central bank, which keeps the dinar in tight ranges, sold euros in the market on Wednesday to support it.

The dinar came under pressure as Serbia's debt management agency decided to skip selling auctions for the rest of the year and even plans two buyback tenders, Raiffeisen analysts said in a note.