Concerns about the progress of U.S. tax overhaul legislation likely also weighed on the dollar, said Marc Chandler, chief global currency strategist at Brown Brothers Harriman & Co.
The Republican drive to push sweeping tax legislation through the U.S. Senate was hurtling toward a dramatic conclusion, as Republican leaders pursued behind-the-scenes deals intended to secure enough votes for passage.
Republican U.S. Senator Susan Collins said on Thursday she was not committed to voting for the Senate tax bill, citing concerns over healthcare and a deduction for state and local taxes.
Senate Majority Leader Mitch McConnell, however, said he is optimistic about getting enough Republican votes to pass the bill.
Data on Thursday reaffirmed expectations for another Federal Reserve interest rate hike in December.
The number of Americans filing for unemployment benefits fell for a second straight week as labor market conditions tightened further.
U.S. consumer spending slowed in October, however, as the hurricane-related boost to vehicle purchases faded.
Underlying price pressures pushed higher for a second straight month, suggesting a recent disinflationary trend has run its course and bolstering expectations that the Fed will raise rates next month.
"Core inflation will probably remain subdued for a few more months, but most Fed officials believe this weakness to be transitory and the Fed still looks set to raise rates in December," Andrew Hunter, an economist at Capital Economics, said in a note.
The British pound strengthened on hopes Britain is close to a deal with the European Union over the Northern Ireland border.
The EU has named the border as one of three issues on which "sufficient progress" must be made before talks can move to negotiations on Britain's future trade relationship with the bloc.
Sterling was up 0.87 percent to $1.3523.