Those gains came partly as U.S. Treasury yields surged to multi-month and multi-year peaks on a faster projected pace of Federal Reserve interest rate increases next year and expectations that U.S. President-elect Donald Trump's policies would boost inflation.
Yields on most U.S. Treasuries hit at least two-week lows on Thursday, however, halting the dollar's gains by reducing the appeal of higher-yielding U.S. assets compared to those of other countries.
"It's profit-taking," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. "The strong dollar that we've seen since the start of November seems to be in a toppish environment." He also noted that trading remained thin during the holiday period.
The euro was last up 0.76 percent against the dollar at $1.0486 after touching a one-week high of $1.0480 in early trading, but was still on track to fall 3.6 percent against the dollar this year.
Data on Wednesday showing contracts to buy previously owned U.S. homes fell in November to their lowest level in nearly a year contributed to the dollar's weakness, said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
"The dollar fall was mostly due to renewed doubts about the U.S. recovery after pending home sales dropped in November. This is where the risk-off reversal started," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.