The U.S. dollar refreshed a near 20-year high of 104.93 on Thursday and closed at 104.75, an increase of about 0.7%. The market continued to worry that the actions of major central banks to curb high inflation will curb global economic growth, which makes the dollar more safe-haven appeal.

U.S. jobless claims unexpectedly rose last week to hit their highest level in three months, but labor market conditions were little changed on the back of strong demand for workers. On the inflation front, the producer price index for final demand (PPI) rose 0.5% in April as gains in energy product prices slowed. That marked a sharp slowdown from March's 1.6% gain. The U.S. core PPI recorded an annual rate of 8.8% in April, compared with an estimate of 8.9%, and 9.2% in March. In the 12 months to April, the PPI jumped 11.0%, against expectations for a 10.7% rise, and March's 11.5% year-on-year rise.

"Today's PPI numbers were mixed and slightly below expectations, but there's still a lot to worry about overall...if the S&P sells off again, it will be broad-based," said Erik Bregar, director of foreign exchange and precious metals risk management at Silver Gold Bull Inc. Support the dollar." The euro was down 1.27% at $1.0378, having touched $1.0352, its lowest since Jan. 3, 2017.

Investors have been trying to assess how aggressive the central bank’s policy path will be since the Fed last week raised its benchmark overnight rate by 50 basis points, the most in 22 years. Markets fully priced in another rate hike of at least 50 basis points at the June meeting, according to CME's FedWatch tool. Gabriel Makhlouf, the governor of the European Central Bank and Ireland's central bank, called on the Governing Council to act on inflation, although not necessarily at the same pace as the Fed. Previously, a number of European Central Bank policy makers have made similar remarks.

Risk assets have been under pressure for much of this year, with the S&P 500 on the verge of confirming a bear market, a 20% drop from its record high. Investors have been drawn to safe-haven assets such as the U.S. dollar, with growing concerns about the Fed's ability to tame inflation without causing a recession, as well as the impact of the war in Ukraine and rising new infections in the Asian powerhouse to dampen demand. Lingering fears of a stagflationary environment of slow growth and high prices also dented investor risk appetite.

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