The U.S. dollar strengthened against its major rivals in the early European session on Thursday, as heightened tensions between the U.S. and China dampened risk sentiment.

Tensions flared up after the Trump administration barred Chinese airlines from flying into the U.S. from June 16 in retaliation against Beijing's restrictions on American and foreign carriers.

Shortly after the announcement, the Civil Aviation Administration of China (CAAC) said it would allow once-per-week flights into a city of their choosing starting on June 8.

All airlines will be allowed to increase the number of international flights involving China to two per week if no incoming passengers on their flights test positive for Covid-19 for 3 consecutive weeks.

Investors await weekly jobless claims and the U.S. trade data due later in the day, as well as the Labor Department's monthly jobs report on Friday for more direction.

The greenback approached 109.15 versus the yen, its highest level since April 7. The greenback is seen finding resistance around the 112.00 level.

The greenback rose to 1.3530 against the loonie, 0.6882 against the aussie and 0.6404 against the kiwi, from its early lows of 1.3489, 0.6933 and 0.6433, respectively. The next possible resistance for the greenback is seen around 1.37 against the loonie, 0.66 against the aussie and 0.62 against the kiwi.

The greenback advanced to a 2-day high of 1.2501 versus the pound, from a low of 1.2581 hit at 7:30 pm ET. If the greenback extends rise, 1.22 is possibly seen as its next resistance level.

The greenback edged higher to 1.1197 versus the euro, after falling to 1.1238 at 5:45 pm ET. On the upside, 1.10 is possibly seen as the next resistance for the greenback.

In contrast, the greenback dropped to 0.9605 against the franc, setting a 2-day low. The greenback is poised to target support around the 0.94 level.

Looking ahead, Eurozone retail sales for April are due out in the European session.

The European Central Bank will announce interest rate decision at 7:45 am ET. The ECB is expected to hold its main refi rate at a record low zero percent and the deposit rate at -0.50 percent.

In the New York session, U.S. and Canadian trade data for April as well as weekly jobless claims for the week ended May 30 are scheduled for release.

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