The dollar held near a two-week peak against the yen and below $1.19 per euro on Thursday, a broad recovery since Tuesday helping it end August close to flat against its major peers.
The biggest mover among the G10 group of developed economy currencies was the New Zealand dollar, down 0.6 percent against its U.S. equivalent after a poor batch of business confidence data.
The greenback gained a quarter of a percent against the yen and was roughly steady at $1.1890 per euro in early trade in Europe, compared to a 2-1/2 year high for the single currency of $1.2069 hit on Tuesday.
The dollar has weakened 0.4 percent against the euro in the past month and is 0.2 percent stronger against the yen.
“The euro’s retreat back below 1.19 indicates that investors have probably become more prudent about driving the common currency to fresh year-to-date highs,” analysts from Unicredit said in a morning note.
U.S. data over the past 48 hours has been on the dollar’s side and some traders also pointed to hopes that the need to pass a disaster relief package for Hurricane Harvey might make it easier for Congress to raise the debt ceiling next month.
“There have been some supportive developments. The data from the U.S. is improving, it looks like we are going to get another solid payrolls report (on Friday),” said Lee Hardman, a strategist with Japan’s MUFG in London.
“In general the dollar is trying to stage a rebound over the last couple of sessions, suggesting the falls last week were probably overdone.”
European Central Bank President Mario Draghi’s lack of concern over the euro’s strength in a speech last week was at the heart of the common currency’s break past $1.20 on Tuesday.
But traders still suspect euro zone officials are growing more concerned about the euro’s rise. Flash inflation numbers for August are expected to show price growth still struggling to get much above 1 percent as the euro gains.
Unease at the Reserve Bank of New Zealand over the strength of its currency have pushed the kiwi more than 4 percent lower in August.
It fell below 1.10 to the Aussie dollar overnight and was 0.6 percent lower at $0.7163 by 0717 GMT.