The dollar edged down on Wednesday as investors took advantage of the thin holiday trading session to book profits for the currency's recent gains.
The dollar has risen sharply of late in anticipation of a Federal Reserve interest rate increase in December, a belief fortified by last week's unexpectedly strong data on U.S. employment. Over the last week, the dollar index has gained about 3 percent.
On Tuesday, the dollar hit a fresh 6-1/2-month high against the euro and a seven-month peak against the Swiss franc, besting highs touched after the release of Friday's surprisingly robust U.S. non-farm payrolls report.
Markets were relatively quiet on Wednesday with trading on U.S. Treasuries closed for the Veterans Day holiday and investors awaiting new information to bolster or weaken the cases for central bank moves in the United States and Europe, said Charles St. Arnaud, senior strategist and economist at Nomura Securities International in London.
The dollar index was down 0.4 percent at 98.953 after touching its highest in seven months Tuesday.
Read MoreECB action in December? Don't count on it: Posen
The euro was up slightly against the dollar, last trading at $1.0741, after dropping below $1.07 for the first time in more than six months Tuesday morning.
European Central Bank President Mario Draghi, speaking at the Bank of England Open Forum on Wednesday, did not address monetary policy, instead discussing deposit insurance across the euro zone.
Draghi and other board members have said that extending the ECB's quantitative easing program, increasing the size of asset purchases and cutting its already negative deposit rate are being considered ahead of the bank's December meeting. Draghi speaks again Thursday.
"He didn't want to rock the boat with his speech today," St. Arnaud said. "Tomorrow he speaks in front of (European)parliament, so obviously he will have to address a bit more monetary policy."
The dollar fell modestly against the yen, Swiss franc , and the Australian, New Zealand and Canadian dollars.
The Australian and New Zealand dollars were the biggest movers against the dollar overnight, gaining nearly half a percent. The Aussie was last at US$0.7056 and the kiwi last traded at US$0.6548.
Sterling, which has also recovered some ground after sharp falls last week, rose higher after a mixed bag of wage data and jobs numbers. It was 0.65 percent up on the day at $1.5220.