Greenback is on pace for its first weekly gain in three months.
The minutes showed that policymakers at the central bank were concerned about rising inflation, which could lead to the Fed raising rates soon than anticipated and reducing its asset holdings, as well as a tight labor market.
According to the CME FedWatch Tool, traders are anticipating a 70% chance of a rate hike of at least 25 basis points at the March fed meeting.
The market is paying attention more to monetary policy and that discrepancy and that is what is driving the dollar, said John Kicklighter, analyst at DailyFX.com in Chicago.
If you are already pricing in the most aggressive, hawkish view that you are going to get, then how much more is the dollar going to go? Labor market data showed that initial jobless claims increased by 7,000 to a seasonally adjusted 207,000. Slightly over the 197,000 forecast. The data came after a very strong private payrolls report on Wednesday in the ADP National Employment report, and ahead of Friday's payrolls report.
The trade deficit in the US increased sharply in November to $80.2 billion, indicating a possible weight on fourth quarter economic growth.
Analysts view 96.40 for the dollar index as a technical resistance point, with a break above likely to result in a December high of 96.91.
A report from the Institute for Supply Management showed that activity in the U.S. services sector slowed more than expected in December due to a rise in COVID 19 infections. The new Omicron variant has been viewed by investors as unlikely to crimp economic activity.
The euro fell 0.19% to $1.1292 as annual inflation in Germany slowed for the first time in six months but was well above the European Central Bank's 2% target in December, according to preliminary data released on Thursday.
The Japanese yen increased by 0.29% against the dollar at 115.76 per dollar, while the euro was trading at $1.3524, down 0.22% on the day. The pound had reached a two-month high of 1.3598 on Wednesday.
The last price of cryptocurrencies fell by 1.12% to $42,947 at the end of the day.