The dollar kept its grip on a two-month high versus the euro on Thursday after upbeat economic data reaffirmed the view that likely future U.S. interest rate rises would lure more funds to the United States.
Consumer price data landed in line with forecasts, supporting investor expectations that the Federal Reserve would gradually raise its benchmark interest rate to at least three percent by mid-year, from 2.25 percent now.
Housing starts data and weekly jobless claims figures were surprisingly strong, although the numbers did not buoy the dollar in U.S. trade as position adjustments swayed the market.
"On the whole the dollar seems to have reversed last year's fall," said Yoshiharu Yanagisawa, vice president of forex at State Street Bank. "But I think the dollar needs more consolidation in the near future."
At 10:20 p.m. EST Wednesday, the euro bought around $1.3010, flat from late U.S. levels but still near a two-month low of $1.2964 struck on Wednesday.
A sharp drop in energy prices helped to pull U.S. consumer prices down 0.1 percent last month. But the core consumer price index, which strips out volatile food and energy, rose 0.2 percent -- in line with market expectations.
Separately, a U.S. Commerce Department report showed housing starts shot up 10.9 percent in December, their biggest jump in more than seven years.
Initial claims for jobless aid plummeted 48,000 last week, the biggest drop in more than three years.