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Investing.com – The U.S. dollar retreated from the previous session’s three-week peak in early European trade Thursday as traders digested the minutes of the Federal Reserve’s December meeting ahead of weekly jobless data.

At 04:20 ET (09:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 102.017, having hit a three-week peak of 102.73 in the previous session.

Dollar slips from recent highs

The of the Fed’s December policy meeting, released late on Wednesday, showed officials were convinced inflation was coming under control and were concerned about the risks of the central bank’s “overly restrictive” monetary policy on the economy.

However, they provided little clarity on the timetable for rate cuts this year.

“The conditionality attached to cutting rates is hawkish in the sense that it puts pressure on markets to unwind the March easing bets, but the risks flagged to the economic outlook and discussion about exiting quantitative tightening are unequivocally dovish,” said analysts at ING, in a note.

Attention will now turn to the weekly data later Thursday, ahead of Friday’s closely watched U.S. report, which will likely give further clarity on how much room the Fed has to lower rates. 

Euro edges higher after French CPI

In Europe, traded 0.2% higher at 1.0947, after the latest figures came in slightly weaker than expected – rising 0.1% on the month in December, an annual rise of 3.7%.

German regional inflation figures have also started emerging Thursday, with the eurozone-wide CPI release due on Friday.

“The ability of the euro to benefit from some unwinding of rate cut bets must be weighed against evidence that the EUR/USD is primarily driven by equity/risk sentiment factors at the moment, and the short-term rate differentials remain heavily unfavourable for the euro,” ING added.

rose 0.2% to 1.2692, with sterling not far above its recent three-week low at 1.2667.

Yen retreats after weak PMI data

Elsewhere, traded 0.3% higher to 143.74, with the yen weakening after purchasing managers index data showed that Japanese economic activity remained fragile, as the remained in contraction in December.

edged higher to 7.1517, with sentiment towards China dealt a fresh blow by Fitch downgrading the ratings of four major state-backed asset managers, and placing three of them on watch for more cuts.