The dollar held close to an eight-month low against its peers on Thursday, as a gloomy U.S. corporate earnings season stoked recession fears and as traders stayed on guard ahead of a slew of central bank meetings next week.
The U.S. dollar index , which measures the greenback against a basket of currencies, inched 0.1% higher to 101.65, after falling as low as 101.52 earlier in the session, testing last week's eight-month trough of 101.51.
Trading was thin, with Australia out for a holiday and some parts of Asia still away for the Lunar New Year.
Downbeat earnings and guidance from U.S. companies and a string of tech sector layoffs have deepened fears of a sharp economic downturn in the United States, leading investors to pare back expectations on how much longer the Federal Reserve will need to aggressively raise interest rates.
"There are now signs the U.S. economy may be slowing in a more meaningful manner," said economists at Wells Fargo.
The Fed's policy-setting committee will begin a two-day meeting next week, and markets have priced in a 25-basis-point (bps) interest rate hike, a step down from the central bank's 50 bps and 75 bps increases seen last year.
Ahead of that, the Commerce Department is due to release advance estimates of U.S. fourth-quarter gross domestic product later on Thursday.
Meanwhile, markets expect policymakers at the Bank of England and European Central Bank (ECB), which will also meet next week, to deliver 50 bps rate hikes. The ECB is seen most likely to remain hawkish.
Sterling was little changed at $1.2400, while the euro slipped 0.03% to $1.0911, though remained close to its nine-month high of $1.0927 hit on Monday.
"The euro does draw a lot of attention," said Jarrod Kerr, chief economist at Kiwibank. The euro zone "had a favourable winter .... The energy crisis that people were expecting hasn't quite played out yet."
Elsewhere, the Canadian dollar last traded at 1.3399 per U.S. dollar, after the Bank of Canada on Wednesday raised its key interest rate to 4.5% but became the first major central bank fighting global inflation to say it would likely hold off on further increases for now.
The Aussie rose 0.2% to $0.7117, on greater expectations that the Reserve Bank of Australia has more to do in raising interest rates, after Wednesday's shock data showed that Australian inflation had surged to a 33-year high last quarter.
