The U.S. dollar edged higher on Thursday, buoyed by global equities volatility amid concerns over AI spending. The Dollar Index rose 0.3% to 97.740, approaching a two-week high. Traders are seeking the safety of the dollar in a risk-off environment. The market is also anticipating a less dovish stance from the Federal Reserve, potentially influencing currency movements.

The euro dropped ahead of the European Central Bank's policy meeting, where rates are expected to remain steady. Investors are watching the post-meeting press conference for insights into future rate decisions. Furthermore, recent data showed easing inflation, adding complexity to the ECB's outlook. Deutsche Bank economists suggest risks may be skewed towards further easing due to inflation undershooting targets.

Sterling also weakened, trading 0.6% lower. The Bank of England is expected to hold its benchmark interest rate. Political pressures are weighing on the pound, with analysts citing the potential for a shift in U.K. fiscal policy impacting the currency. The Japanese yen remained under pressure ahead of elections.

In Asia, the Japanese yen remained under pressure ahead of the upcoming lower house elections. The Chinese yuan remained stable. The Australian dollar also saw slight declines. The market is keenly awaiting key employment data releases, which could further influence the dollar's trajectory and overall market sentiment.