The U.S. currency hit its highest level in more than three months on Wednesday.
Risk appetite was mixed, with U.S. stocks ending slightly higher on the day, but Treasuries were well-bid, which pushed yields lower.
Despite the pullback in the dollar from 3-1/2-month peaks, it remains in demand among investors, analysts said.
"There is a lot of uncertainty whether you're looking at U.S. markets, global macro, COVID concerns, or whether you're looking at political risks," said Simon Harvey, senior FX market analyst at Monex Europe in London.
"I don't think this dislocation is going to clear in the short term, so I see the dollar remaining buoyant over the next few months," he added.
Earlier in the session, the greenback slid in the wake of higher-than-expected U.S. jobless claims data that raised concerns about the world's largest economy's recovery from the pandemic.
The euro, on the other hand, was firmer early in the day after the ECB met expectations by pledging to keep interest rates at record lows for even longer.
ECB President Christine Lagarde, in her media briefing, did not say anything to change the market's cautious outlook on the euro zone. She said a fresh wave of the coronavirus pandemic could pose a risk to the region's recovery, although she did offer a more balanced economic outlook.
The ECB's dovish pivot - which follows its recently released strategy review - at a time when many peers are mulling exiting pandemic-era stimulus is expected to keep the single currency under pressure.
Graphic: ECB inflation forecast annotated - https://fingfx.thomsonreuters.com/gfx/mkt/xklvyxrrepg/ECB%20inflation%20forecast%20annotated.JPG
In late afternoon trading, the euro was down 0.2% $1.1767, not far from a 3-1/2-month low of $1.1752 hit on Wednesday.
The dollar index, meanwhile, rose 0.1% to 92.852, as the impact of the U.S. jobless claims data faded.
Data showed initial claims for state unemployment benefits increased 51,000 to a seasonally-adjusted 419,000 for the week ended July 17, the highest since mid-May. Economists polled by Reuters had forecast 350,000 applications for the latest week.
Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said the data risks pushing the Federal Reserve's tightening plans well into the future, putting further pressure on bond yields.
Growth-focused currencies such as the Australian dollar gained as a global risk sell-off abated further. The Aussie was last up 0.2% at US$0.7372.
Sterling firmed 0.4% to $1.3767, recovering from 5-1/2-month troughs, while in cryptocurrencies, bitcoin rose 0.4% to $32,287.
Bitcoin rose modestly after Business Insider reported that JPMorgan Chase & Co will allow all of its wealth management clients access to cryptocurrency funds.
The dollar slipped 0.1% against the yen, another safe haven, to 110.17 yen.
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Sujata Rao and Tommy Wilkes in London; Editing by Bernadette Baum, Mark Heinrich and Dan Grebler)
By Gertrude Chavez-Dreyfuss