The U.S. dollar erased its early gains against its major opponents in the European session on Thursday, after a data showed that the nation's economic growth matched economist estimates in the fourth quarter of 2020.

Data from the Commerce Department showed that real gross domestic product jumped by 4.0 percent in the fourth quarter after skyrocketing by 33.4 percent in the third quarter. The continued GDP growth came in line with expectations.

Despite the rebound in the second half of the year, GDP for 2020 contracted by 3.5 percent following the 2.2 percent growth seen in 2019.

Data from the Labor Department showed a continued pullback in first-time claims for U.S. unemployment benefits in the week ended January 23.

The Labor Department said initial jobless claims fell to 847,000, a decrease of 67,000 from the previous week's revised level of 914,000.

Economists had expected jobless claims to drop to 875,000 from the 900,000 originally reported for the previous week.

Caution prevailed as the Federal Reserve offered a downbeat assessment of the economy, saying that the virus crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.

The economy was still a long way from a complete recovery, Powell said, adding that it is too early to talk about tapering the Fed's asset purchase program.

The dollar appreciated during the Asian session, as concerns about over valuations in equity markets and the Fed's indication of a slowdown in the pace of the recovery boosted safe-haven demand.

The greenback reached as low as 1.2142 against the euro, down from Wednesday's closing value of 1.2108. The next immediate support for the greenback is seen around the 1.24 level.

The greenback edged down to 1.3695 against the pound, after a 2-day rise to 1.3630 at 4:30 am ET. The pound-greenback pair had ended yesterday's trading session at 1.3679. The greenback is likely to challenge support around the 1.41 mark.

Data from the Society of Motor Manufacturers and Traders showed that UK car production declined to the lowest in 36 years in 2020 amid the coronavirus pandemic.

Car production decreased 29.3 percent to 920,928 units in 2020. This was the lowest output since 1984.

The greenback reversed from an early 1-1/2-month high of 104.46 against the yen, with the pair worth 104.25. The pair had closed Wednesday's deals at 104.09. The greenback is seen finding support around the 100.00 region.

Data from the Ministry of Economy, Trade and Industry showed that Japan retail sales fell 0.3 percent on year in December - coming in at 14.434 trillion yen.

That beat expectations for a decline of 0.4 percent following the downwardly revised 0.6 percent increase in November.

Having advanced to an 8-day high of 0.8919 at 4:30 am ET, the greenback turned lower against the franc and was trading at 0.8885. Further decline in the currency is likely to see support around the 0.86 level.

Data from the Federal Customs Administration showed that Switzerland's exports declined in December.

Exports decreased 6.4 percent month-on-month in December, while imports declined 6.7 percent.

The greenback eased off to 0.7150 versus the kiwi, 0.7647 versus the aussie and 1.2824 versus the loonie, following its early 9-day high of 0.7105, more than 4-week high of 0.7592 and a fresh 5-week high of 1.2881, respectively. The dollar had closed Wednesday's trading at 0.7156 versus the kiwi, 0.7662 versus the aussie and 1.2796 versus the loonie. If the greenback slides further, 0.74, 0.78 and 1.21 are likely seen as its next support levels versus the kiwi, the aussie and the loonie, respectively.