The US dollar strengthened on Thursday but remained below a 12-week high reached earlier this week, as traders weighed comments from policymakers in the previous session that suggested rates would remain high for longer.
On Thursday, several Federal Reserve policymakers gave a variety of reasons to feel less anxious about starting policy easing anytime soon or to move quickly if they do.
"The central bank needs to be confident that, not only will inflation come down, but that it will also stay low," said Colin Asher, senior economist at Mizuho.
Markets are pricing in about a 20% chance that the Fed will begin cutting rates in March, which is far less than at the start of the year, and about a 60% chance of a 25 basis point cut in May, according to the FedWatch Tool.
The US dollar index was last up 0.26% at 104.23, having hit 104.60 on Monday, its highest level since November 14, boosted by Friday's extraordinary jobs report.
Higher US bond yields have fueled the strengthening of the US dollar, especially against lower-yielding currencies, such as the yen.
On the other hand, the President of the Federal Reserve Bank of Richmond, Thomas Barkin, said on Thursday that the stronger than expected data about the United States economy may be partly due to the difficulty of making accurate seasonal adjustments around the start of the new year.
Barkin cited strong economic growth and large job gains as likely factors. Barkin also reiterated that the Fed could be patient in analyzing more inflation data before making any changes to policy.
