The U.S. dollar gave up its early gains against the euro on Thursday amid hopes that European Union heads can come up with a joint financial fund to help the region recover from the coronavirus pandemic.
Against the dollar, the euro was about flat on the day after slipping to a 1-month low.
"The euro is snapping back a bit on the possibility that European leaders reach some form of agreement and provide stimulus to the area that helps to put a floor under the economy," said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.
Divided European Union leaders began their search on Thursday for a joint financial fund of up to 2 trillion euros to help recover from the coronavirus pandemic and avoid economic collapse in the bloc's poorer south.
German Chancellor Angela Merkel signalled readiness on Monday to finance economic recovery in Europe from the coronavirus pandemic through a bigger European Union budget and the issuance of joint debt via the European Commission.
Earlier in the session the euro took a hit after a survey showed economic activity in the euro zone all but ground to a halt this month as the coronavirus outbreak sweeping across the world forced governments to impose lockdowns and firms to down tools and shut their businesses.
The coronavirus has infected more than 2.57 million people globally and killed over 178,000, and with citizens told to stay at home economic activity has plummeted.
The economic data out of the United States was also grim.
U.S. business activity plumbed new record lows in April as the coronavirus severely disrupted manufacturing and services industry production, pushing the economy into uncharted waters.
Separately, the Labor Department said on Thursday 4.427 million more people applied for unemployment benefits for the first time last week.
The U.S. Dollar Currency Index, which measures the greenback's strength against six other major currencies, was 0.25% lower at 100.22. The index hit a more than two-week high of 100.69 earlier in the session.
The yen gave up some early gains against the dollar to trade about flat on the day after a report in the Nikkei newspaper said the Bank of Japan will discuss scrapping its cap on government bond purchases at its next policy meeting on April 27.
The dollar slipped against the currencies of oil-producing states as a bounce in crude prices gave succour to markets shaken by the massive coronavirus-induced drop in demand.
The Norwegian crown, Russian rouble and Mexican peso all gained as Brent crude rallied on tensions in the Middle East and signs that producers were cutting production to address collapsing demand for fuel.
The pound rose 0.3% against the dollar even after dire UK preliminary PMI readings for April, as market activity appeared immune to new data about the disastrous economic fallout from the coronavirus.