The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades in negative territory for the third consecutive day near 102.70, down 0.28% on the day.

Investors will keep an eye on the US March Consumer Price Index (CPI) inflation and weekly Initial Jobless Claims reports, which are due later on Thursday.

The Greenback edges lower after US President Donald Trump ramped up his trade war against China while temporarily pausing tariffs on many other countries for 90 days.

"It seems likely that the U.S. President blinked (when) confronted with a potential recession, a political backlash, a near equity bear market, and the early warning signs of a financial crisis," said Kyle Rodda, an analyst at capital.com. "There's now less confidence in the U.S. government amongst investors," he said.

The US Federal Reserve (Fed) officials acknowledged that inflation could prove to be more persistent than expected as there is a high degree of uncertainty surrounding Trump's tariffs, according to minutes from their March meeting.

This uncertainty has also raised concerns about a potential economic downturn in the US. Minneapolis Fed President Neel Kashkari warned late Wednesday that continued economic uncertainty could push the US economy into a downturn.

Additionally, Cleveland Fed President Beth Hammack takes a cautious stance on interest rate forecasts, saying that uncertainty wrapped up in US trade policy will continue to make it difficult for the central bank to engage in market-smoothing operations

Traders have raised their rate-cut estimates in recent weeks. According to the CME FedWatch tool, derivatives markets now imply a 44% possibility that the Fed will cut rates at its next meeting on May 6-7, up from 14% a week ago.

Source: FXStreet