A pullback in U.S. bond yields, with two-year Treasury yields retreating from a near nine-year peak, also stoked some selling in the dollar.

"There's nothing concrete so that encouraged some profit-taking," Kathy Lien, managing director at BK Asset management in New York said of President Donald Trump's nominee for Fed chief.

Profit-taking on the greenback occurred even in the wake of surprisingly strong data on durable goods orders and new home sales in September, analysts said.

New orders for U.S. capital goods rose more than forecast by 2.2 percent last month, while new home sales unexpectedly jumped to a near 10-year high in September.

Among other major currencies, sterling climbed almost 1 percent to an eight-day high of $1.3271 after stronger-than-expected U.K. growth data cemented expectations the Bank of England will raise interest rates next week.

The Canadian dollar tumbled to C$1.2816 to the greenback , its weakest since July 12, after the Bank of Canada as expected left key overnight rates unchanged.

Despite Wednesday's pullback, the dollar index has gained 0.6 percent in the past week on hopes for a tax-cut plan and in the aftermath of reports that Stanford University economist John Taylor impressed Trump in his interview for the Fed's top post.

Taylor favors a rule-based approach to setting interest rates and is seen as someone who may put the Fed on a path of faster rate hikes compared with Fed Chair Janet Yellen, whose term expires next February.

Trump's other possible nominees to head the Fed include Yellen, Fed Governor Jerome Powell, his economic adviser Gary Cohn and former Fed Governor Kevin Warsh.

On Wednesday, a senior administration official said Trump was not likely to pick Cohn due to his key role on tax reform, while Trump told Fox Business Network that he thinks Yellen is "terrific" but suggested he would like make his "own mark" for a Fed chair.

Trump is expected to announce his Fed chair candidate before his Asian trip in early November.

The index tracking the greenback versus six currencies <.DXY> was down 0.1 percent at 93.696, holding below a 2-1/2 week high of 94.017 set on Monday.

The dollar climbed to 114.245 yen, its highest since July 11 , following Sunday's victory for Prime Minister Shinzo Abe, whose ultra-loose monetary policy should keep pressure on the yen. It was down 0.2 percent at 113.70 yen in late trading.

The euro gained 0.4 percent at $1.181 before Thursday's European Central Bank policy meeting, prompted by expectations it would announce the start of trimming its monthly asset purchases to 40 billion euros from 60 billion euros in January.

(Additional reporting by Jemima Kelly in London, Masayuki Kitano in Singapore and Wayne Cole in Sydney; Editing by Chris Reese and Chizu Nomiyama)

By Richard Leong