The U.S. dollar strengthened against its major counterparts in the European session on Thursday, on hopes that lawmakers will reach a deal for raising the debt limit.

On Wednesday, President Joe Biden and House Speaker Kevin McCarthy agreed to negotiate directly on a deal to lift the government's borrowing limit.

"The leaders (of Congress) have all agreed: We will not default. Every leader has said that," US President Joe Biden said on Wednesday.

McCarthy said it is "possible" to get a deal by the end of the week and the country would not default on its debts.

U.S. jobless claims data is due later in the day. Economists expect jobless claims to fall to 254,000 in the week ended May 13 from 264,000 in the previous week.

The greenback climbed to 1.2438 against the pound and 0.9010 against the franc, off its early lows of 1.2492 and 0.8975, respectively. The greenback is likely to find resistance around 1.21 against the pound and 0.92 against the franc.

The greenback edged up to 0.6629 against the aussie, 0.6234 against the kiwi and 1.3480 against the loonie, from its early lows of 0.6667, 0.6269 and 1.3442, respectively. The greenback is poised to find resistance around 0.63 against the aussie, 0.60 against the kiwi and 1.38 against the loonie.

The greenback firmed to a 5-month high of 137.93 against the yen and a 1-1/2-month high of 1.0809 against the euro, up from its prior lows of 137.28 and 1.0848, respectively. Next near term resistance for the greenback is likely seen around 139.00 against the yen and 1.06 against the euro.

Looking ahead, Canada new housing price index for April, U.S. weekly jobless claims for the week ended May 13 and existing home sales for April are due to be released in the New York session.

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