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The dollar steadied on Thursday as it nursed some of its steep losses from previous sessions, with traders looking ahead to a key U.S. inflation reading at the end of the week that could offer further clues on the outlook for rates there.

Friday's release of the core personal consumption expenditures (PCE) price index - the Federal Reserve's preferred measure of inflation - headlines a week that's otherwise been lacking on major market moving data, leaving currencies mostly rangebound.

Still, the dollar held to its overnight gains in early Asia trade on Thursday, after having risen 0.48% against a basket of major peers in the previous session. Analysts also attributed the rise to month-end demand.

The euro was off its 13-month high and last bought $1.1130. Sterling rose 0.08% to $1.3201, but was some distance away from Tuesday's peak of $1.3269, its strongest level since March 2022.

The Australian dollar eased away from an eight-month top and last stood at $0.6793.

"PCE is definitely this week's most important print in the U.S., but I doubt it will materially move market expectations for FOMC policy unless there is a significant miss," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

Markets have fully priced in a 25-basis-point rate cut from the Fed next month, with a 34.5% chance of an outsized 50bp reduction, according to the CME FedWatch tool.

Investor bets for imminent U.S. rate cuts were further cemented by Fed Chair Jerome Powell's remarks at Jackson Hole last week that the "time has come" to cut rates, joining a chorus of Fed policymakers who have signalled the same in recent times.

The prospect of lower U.S. rates next month has toppled the dollar, which had, for the most part of the past two years, been boosted by the Fed's aggressive tightening cycle and expectations of how much higher rates could rise.

The greenback has since fallen some 2.9% for the month thus far, putting it on track for its steepest monthly decline in nine months.

The dollar index was last at 100.94, steadying from its fall to a 13-month low of 100.51 on Tuesday.

In other currencies, the New Zealand dollar ticked up 0.2% to $0.6258, while the yen was last little changed at 144.57 per dollar. It was set to rise 3.7% for the month.

Contrasting with an imminent Fed easing cycle, policymakers at the Bank of Japan (BOJ) have signalled that the central bank would continue to raise interest rates if inflation stayed on course, offering some relief to the Japanese currency which had come under immense pressure owing to stark interest rate differentials.

"With the Fed now closer to cutting rates and the BOJ normalising still-negative real policy rates, the USD/JPY should decline closer to its fair value of around 135," said strategists at Lombard Odier in a note.