The dollar index, which measures the currency against six major peers, rose 0.019% to 102.65, after gaining 0.19% overnight. The index was on course, however, to clock a 2% decline for March due to market tumult over problems in the banking industry.

"The broader risk sentiment appears sustained as bank contagion concerns continued to fade and a rally in China equities grabs some attention," said Christopher Wong, a currency strategist at OCBC in Singapore.

Asian equities got a boost from Alibaba (NYSE:BABA) this week after the tech behemoth announced plans on Tuesday to split into six units, which investors have taken as a signal that Beijing's regulatory crackdown on corporations is ending.

"While risk sentiment somewhat continued to hold up this week, we expect month-end flows alongside risk-on, risk-off flows to drive two-way trade," Wong said.

Banking stocks were battered in the past few weeks in the wake of the sudden collapse of two U.S. lenders and the rescue of Credit Suisse, with the dollar under pressure from the possibility that the Fed may have to relent in its fight against inflation and pause rate hikes.

But with no further signs of cracks in the financial sector and after steps taken by regulators, investor nerves have been calmed for now. Their focus has switched back to what the Fed is likely to do at its next meeting in May.

Markets are pricing in a 60% chance of the Fed standing pat on interest rates, according to the CME FedWatch tool, with investors expecting rate cuts towards the end of the year.

Data on personal consumption expenditures due on Friday will provide further clues on inflationary pressures.

"With recession fears fading off, the market's focus is now turning to the upcoming U.S. PCE data later this week, which is seen as the Fed's favourite inflation parameter," said Tina Teng, an analyst.

The euro was down 0.04% at $1.0839, but was on track to end the month with a 2% gain. Sterling was flat at at $1.2311, after slipping 0.2% on Wednesday.

The Japanese yen strengthened 0.23% to 132.57 per dollar, after falling 1.5% overnight. The currency has been volatile in the run-up to the end of the Japanese fiscal year on Friday.

The Australian dollar rose 0.06% to $0.669, while the kiwi fell 0.10% to $0.622.