The dollar was on track to snap a four-day losing streak against a basket of major currencies on Thursday, as worries about the threat of a clash between Western powers and Russia in Syria faded.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.22 percent at 89.77 after four straight days of declines.
U.S. President Donald Trump warned on Wednesday of imminent military action in Syria over a suspected poison gas attack. On Thursday, he amended that warning, saying a military strike "could be very soon or not so soon at all.".
The threats had piled pressure on investors already rattled by a trade spat between the United States and China.
"It's a reversal of the safe-haven trade that lifted the yen and the Swiss franc earlier in the week," said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.
The dollar was up 0.46 percent against the Swiss franc and 0.41 percent higher against the . The Swiss and Japanese currencies are often sought in times of global tension partly because the countries have big current account surpluses.
Data on Thursday showed new applications for U.S. unemployment benefits fell last week, pointing to sustained labor market strength.
"It dovetails with what we saw in the Fed minutes yesterday, really suggesting that the Fed is on autopilot at this point toward quarterly rate hikes in the year ahead," said Schamotta.
The euro was down 0.32 percent at $1.2326 after minutes from the European Central Bank's meeting in March showed that policymakers expressed concern over the risk of a full-fledged trade war with the United States and fretted over the potentially harmful impact of the euro's strength.
Investors were also concerned about a downturn in Purchasing Managers' Indexes across the euro area, Schamotta said.
"It very much looks like the euro area is losing some of the momentum that was carrying the currency higher over the last year and a half," he said.
Euro zone businesses rounded off the first quarter of 2018 with their slowest growth in over a year, as new business took another hit from a stubbornly strong euro, a survey in March showed.
To be sure, some market participants view the slowdown as temporary.
"In recent weeks, we see pretty good signs of slowing in Europe and Asia. We think this is a soft patch not a sustained downturn. This might last a couple of months," said Alessio de Longis, portfolio manager for OppenheimerFunds' global multi-asset group, in New York.
Sterling edged higher against the dollar as traders prepared for data next week that could help shore up expectations of a May interest rate hike. The pound was up 0.34 percent at $1.4224.
Cryptocurrency prices jumped on Thursday, led by a surge in bitcoin to two-week highs, with people active in the market citing a squeeze on traders who have bet against prices. On the Luxembourg-based Bitstamp exchange, bitcoin was up 10.83 percent at $7,690.82.