The dollar rose on Wednesday after U.S. private-sector jobs numbers massively beat forecasts to rise already sky-high expectations that U.S. interest rates will go up next week.
U.S. stock markets looked set for a cautious open, with index futures flat to slightly higher.
Europe's main share index, which had barely moved before the U.S. data, headed higher. The pan-European STOXX 600 index was up 0.1 %, having fallen in the four previous trading days.
The modest moves in the index masked a gain of 7.5 % to a record high for German sportswear firm Adidas after its new boss increased sales and profit targets.
French state-owned utility EDF, by contrast, hit an all-time low after the government sold 231.1 million preferential shares as part of a capital hike.
Britain's blue-chip FTSE 100 index earlier regained ground and sterling halved its losses against the dollar and euro as finance minister Philip Hammond delivered his first budget since the UK voted to leave the European Union.
Hammond unveiled higher forecasts for growth and inflation in 2017 but a lower projection for next year.
Sterling traded 0.2 % lower on the day at $1.2177, up almost half a cent from the day's lows, even after the U.S. data. It was marginally lower on the day at 86.67 pence per euro.
The dollar rose 0.3 % against a basket of currencies after a U.S. private sector employment showed 298,000 jobs were added last month, 110,000 more than forecast.
Some analysts are waiting for Friday's U.S. non-farm payrolls data as a final piece of evidence supporting a 25 basis point rise at a Federal Reserve policy meeting on March 14-15, which futures prices indicate is an 87.5 % probability.
"Unless the market were to price in a significantly more upbeat picture for the US, which would imply the Fed might move much more dynamically than is currently priced in, whether they hike two time or three times this year isn't going to matter for the dollar," said Sonja Marten, FX strategist at DZ Bank in Frankfurt.
The euro weakened 0.2 % to $1.0536 a day before a meeting of European Central bank policymakers.
"We're expecting them to change their assessment around the risks – at the moment they have them to the downside, but we have an out-of-consensus call that they're likely to say either that downside risks have diminished or become more balanced," said BNP Paribas currency strategist Sam Lynton-Brown.
ECB asset-buying to stimulate the euro zone economy is among factors that have pushed yields on short-dated German government bonds to record lows in recent weeks.
Two-year yields edged down 1 basis point to minus 0.88 % while 10-year yields rose 4 bps to 0.36 %, taking the gap between them to 122 bps, its widest since July 2014.
A German auction of five-year bonds on Wednesday met lackluster demand, attracting bids worth less than the 4 billion euros of bonds on offer.
"We know the ECB is keen on buying much shorter-dated debt so that may have tipped the balance against five-year paper," said Commerzbank rates strategist David Schnautz.
Earlier, trade data from Beijing briefly pushed the MSCI's broadest index of Asia-Pacific shares outside Japan higher, although it later traded flat. Mainland Chinese shares dipped but Hong Kong stocks rose 0.4 %.
China's imports in February grew 44.7 % from a year earlier on a yuan-denominated basis and 38.1 % in dollar terms, accelerating from the previous month and leading to a rare trade deficit. Exports rose 4.2 %.
The yen was half a % weaker at 114.56 per dollar.
Oil prices fell in anticipation of data expected to show growing U.S. crude stockpiles. Brent, the international benchmark, fell 52 cents a barrel to $55.40.
"Oil is range-bound. If prices dip below $50 a barrel, OPEC will cut more; if it goes above $55 the U.S. will produce more," said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.
Gold fell 0.5 % to $1,210 an ounce, weighed down by the prospect of higher U.S. interest rates.