The US dollar recovered some of its recent losses during Thursday's trading after the Federal Reserve left interest rates unchanged, while Fed Chair Kevin Warsh left investors waiting for greater clarity on how policymakers will resolve divisions within the Federal Open Market Committee over the future path of monetary policy.

The greenback also received additional support after the United States announced it had carried out airstrikes inside Iran, boosting demand for safe-haven assets.

In trading, the US Dollar Index rose 0.1% to 100.93 after falling to its lowest level in a week following the Fed's decision, which investors initially viewed as less hawkish than expected.

The euro slipped 0.1% to $1.1458, while the Japanese yen traded near 163.5 per dollar, posting a modest decline during the session.

Sterling held steady at $1.337 after falling by as much as 0.3% earlier in the day ahead of the Bank of England's interest rate decision, with markets widely expecting policymakers to leave rates unchanged. The pound also strengthened against the euro, which fell 0.2% to 85.69 pence.

Treasury market volatility

US Treasury markets experienced sharp moves following the Federal Reserve's decision, with the yield on the 30-year Treasury bond rising above 5.2%, its highest level in roughly two decades.

Meanwhile, five-year Treasury Inflation-Protected Securities (TIPS) came under pressure after rallying in the previous session, a move that had pushed their yields down by around seven basis points.

Focus shifts to inflation data

Investors are now turning their attention to the release of the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred measure of inflation.

Annual inflation is expected to slow to 3.7% in June from 4.1% in May, supported by lower energy costs during the temporary lull in tensions between the United States and Iran.

Following Wednesday's monetary policy statement, investors modestly increased expectations that the Federal Reserve will leave interest rates unchanged at its September meeting. According to the CME FedWatch Tool, the probability of rates remaining on hold has risen to 30%, up from 24% before this week's Fed meeting.