Some strategists were surprised at the extent of the dollar's rally and felt market participants have put too much credence in the rate forecasts, instead of what Fed officials said.
The dollar rose as high as 108.96, the strongest since late August 2008. It last traded at 108.74, up 0.4 percent.
The U.S. currency's gains extended after the government reported that initial claims for unemployment benefits dropped by 36,000 to a seasonally adjusted 280,000 for the week ended Sept. 13, the lowest since July.
Economists polled by Reuters expected claims to fall to only 305,000 last week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, slipped by 4,750 to 299,500.
Separately, a government report showed U.S. housing starts declined in August, but upward revisions for July offered hope the housing market was continuing to gradually improve.
The dollar index hit a more than four-year peak of 84.782 and was last at 84.462, up 0.2 percent.
The greenback retraced gains versus the Swiss franc, trading down 0.4 percent at 0.9369 franc. On Wednesday following the Fed meeting, the dollar hit a one-year high against the Swiss currency.
The euro recovered after falling to a 14-month low on Wednesday versus the dollar to trade 0.2 percent higher at $1.2893.
Sterling, meanwhile, made more progress, the result of growing conviction among traders that a ``No'' vote will prevail in Thursday's Scottish referendum, heading off the threat of a shock to the UK political and financial status quo.
The pound was last up 0.6 percent at $1.6376.
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