Weaker jobs numbers, due to be released on Friday, could instead cement a case for later action - a pre-announcement in November with a formal decision in December
The US currency was underpinned by data, released on Thursday, showing US producer prices posted their largest annual increase in more than a decade in the 12 months through July
The dollar index, measuring the greenback against a basket of six currencies, was 0.27% higher at 90.036. The index hit a four-month low earlier in the session.
"We continue to expect the USD to remain soft while US yields remain contained," Osborne said.
"The dollar is really going to struggle to hold onto gains," said Mazen Issa, senior foreign exchange strategist at TD Securities.
"The Fed has made it clear in no uncertain terms that they intend to look through transitory inflation factors and they are not perturbed by these moves," said Issa.