The euro rose nearly half a percent to hit a one-week high against the dollar on Thursday as investors took profits on the dollar's recent rally and turned their focus to upcoming U.S. data.
Expectations the Federal Reserve will tighten monetary policy aggressively to offset rising inflationary pressure had pushed the dollar to a two-month high against the European single currency and five-month peak versus the yen earlier this week.
The dollar retraced some of those gains in the absence of new driving factors, analysts said. Fed chairman Alan Greenspan's silence on rates or inflation in his speeches earlier this week also left markets guessing about the central bank's policy signals.
"The dollar has had an aggressive rally but it is going to take more dollar-positive information to see a big trend change," said Paul Mackel, foreign exchange strategist at ABN Amro.
Some analysts said investors will be watching U.S. weekly jobless claims data, to be released at 1230 GMT, to gauge the strength of U.S. economic growth.
New jobless claims are estimated to have fallen to 332,000 in the week ended April 2, from 350,000 a week earlier.
The euro rose nearly half a percent from the U.S. close to $1.2939, the single currency's best showing since April 1 and compared with two-month lows around $1.28 set on Tuesday. It eased to $1.2913 by 0545 EDT.
The dollar was down 0.3 percent against the yen at 108.25 yen, more than half a yen below five-month highs set on Tuesday.