The U.S. dollar was mixed against other major currencies on Thursday after data showed a rise in jobless claims and stocks posted modest gains.
The euro was slightly higher against the dollar on signs the pace of the region's economic downturn is no longer accelerating.
The British pound also rebounded versus the greenback after dropping the previous day on weak economic data and government plans to massively boost borrowing in coming years.
The U.S. dollar rose to 98.29 yen versus the Japanese currency, up from 97.93 yen.
The dollar index , a measure of the U.S. unit against a trade-weighted basket of currencies, fell to 86.22 in recent trade, little changed from 86.230 in North American trade late Wednesday.
On Wall Street, U.S. stocks rose, as strong results from Apple Inc. offset data showing a rise in jobless claims.
First-time claims for state unemployment benefits rose a seasonally adjusted 27,000 to 640,000 in the week ended April 18, the Labor Department reported Thursday.
At the same time, continuing claims hit 6.14 million -- more than double the level in the prior year. These continuing claims have reached new weekly records since late January, signaling that workers are having a tough time finding jobs.
Euro edges up
The euro traded at $1.3013 versus the dollar, up from $1.3001.
Earlier, the euro rose to an intraday high of $1.3083.
The single currency pushed back toward its earlier daily high after the Markit euro-zone purchasing managers indexes, which are among the region's most closely followed leading indicators, rose to six-month highs.
Make no mistake, the readings still point to a sharp contraction in activity. But they offered a preliminary sign that the second-quarter gross domestic product may contract at a significantly slower pace than seen in the final quarter of 2008 and the first quarter of 2009, economists said. See full story on euro-zone April PMI readings.
"As a matter of fact, the PMIs continue to suggest a significant pace of output decline. However, today's data contain some clearly positive news, particularly in manufacturing, that make us more confident that we will see an easing in the pace of recession starting from" the second quarter, said Marco Valli, economist at UniCredit MIB.
UniCredit expects a 0.6% second-quarter fall in GDP after a likely 1.7% drop in the first quarter.
The data may also, at the margin, strengthen the position of European Central Bank policy makers who are resistant to implementing a more aggressive plan supplement monetary easing by purchasing a broader range of financial assets, Valli said.
The British pound traded at $1.4537 versus the dollar, up from $1.4489 late Wednesday.
Sterling fell sharply Wednesday after Chancellor of the Exchequer Alistair Darling said borrowing would soar in coming years.
Darling vowed to rein in surging deficits, but economists noted the rebound was based in part on extremely optimistic estimates, including a call for the economy to rebound by more than 1% in 2010 and to grow by 3.5% in 2011 and beyond.
"This is fantasy, particularly as this rapid rebound is expected to occur not only as the legacy of the credit crunch lingers on, but also as fiscal policy is tightened aggressively through significant tax hikes, largely on those on high incomes, and through spending cutbacks," wrote economists at Standard Chartered Bank.
Darling slashed his 2009 forecast to call for a 3.5% contraction, after projecting a decline of around 1% last fall.
The budget also boosts taxes on the wealthy, implementing a new 50% tax rate on annual earnings above 150,000 pounds ($218,055) beginning next April. See full story.
"Yesterday may have been dominated by sterling weakness in light of the budget but the currency is already staging something of a reversion off recent lows, suggesting that the worst of the downside may have already been priced in at the start of the week," said James Hughes, market analyst at CMC Markets.
