The dollar edged higher on Thursday as market expectations of a U.S. rate cut in December were tempered. Federal Reserve Chair Jerome Powell's remarks led traders to reassess their outlook on rate adjustments, influencing currencies worldwide.

Markets were bracing for a busy day with the Bank of Japan's (BOJ) policy announcement and a key meeting between President Donald Trump and China's Xi Jinping. Analysts anticipated discussions to ease trade tensions, which have been ongoing for months.

Despite ongoing debates within the central bank, Powell's cautious approach stirred investor sentiment, impacting the euro and sterling significantly. With BOJ rates at the forefront, political factors and Japan's new leadership were expected to influence the central bank's decisions.

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