- The United States and China escalated their months-long trade war, implementing punitive 25 percent tariffs on $16 billion worth of each other's goods, rattling investors who have sought safety in the dollar.
- The greenback also found support after the Fed's minutes showed officials discussed raising rates soon.
The dollar snapped a five-day losing streak and the euro fell on Thursday, with the greenback boosted by political uncertainty, a new round of trade tariffs and the Federal Reserve's latest policy meeting minutes that signaled a September rate rise.
While the minutes were largely as expected and initially taken as dovish by the market, analysts said dollar bulls had been looking for an excuse to pile back into the greenback after it had lost more than 2 percent from almost 14-month highs during its longest losing streak of the year.
The United States and China escalated their months-long trade war, implementing punitive 25 percent tariffs on $16 billion worth of each other's goods, rattling investors who have sought safety in the dollar.
The greenback also found support after the Fed's minutes showed officials discussed raising rates soon.
"I think the market has been waiting for the moment to get back in (to the dollar)," said Neil Mellor, a strategist at BNY Mellon.
The dollar index gained 0.3 percent to 95.415, moving off a near-three-week low of 94.934 reached overnight.
The euro was down about 0.3 percent at $1.1559, easing from a two-week high of $1.1623.
The single currency was little moved by a widely-followed survey showing that the growth of euro zone businesses picked up a touch this month, although not as much as predicted.
"I'm still not fully convinced we have a sustained dollar rally here, especially after Mr Trump's comments," Mellor said, referring to President Donald Trump's criticism of the Fed's rate hikes in an interview this week with Reuters.
The Australian dollar dropped 0.8 percent to as low as $0.7283 as Prime Minister Malcolm Turnbull clung to power after several of his senior ministers called for a second leadership vote.
The yen fell 0.3 percent to 110.91 on safe-haven demand for the dollar.
The Fed's minutes showed that officials had examined how global trade disputes could affect businesses and households, suggesting that the market's perceived path for monetary tightening could have to change if the trade conflict upsets the U.S. economy.
Talks between U.S. and China officials in Washington over trade will continue on Thursday, although most analysts do not expect much headway to be made, with the risks growing that the conflict descends into a growth-sapping tariff war.
The preliminary talks "look unlikely to yield too much in the way of progress as they enter a second day, with the U.S. President, given his current political difficulties, unlikely to want to concede any further ground," said CMC Markets analyst Michael Hewson.
News that two of Trump's former advisers face prison sentences has heaped political pressure on the president.
Emerging market currencies mostly fell as the dollar rallied.
The offshore yuan slid 0.4 percent to 6.8765 yuan per dollar after the latest round of tariffs took effect.
The Swiss franc gained 0.3 percent to 1.1374 francs per euro, ending its recent run of losses. The franc hit a near 13 month high of 1.1244 earlier in August.