The euro edged up on Thursday as investors price in the chance of an aggressive near-term tightening path by the European Central Bank, while the safe-haven dollar took a breather after significant gains in the previous sessions.

Money markets are currently pricing in 106 basis points (bps) of ECB rate hikes from around 95 bps on Tuesday before ECB official Klaas Knot signalled a 50-basis-point rate increase was possible in July.

U.S. money markets, meanwhile, are still discounting around 200 bps of Fed rate hikes by December 2022.

Risk appetite in the currency market is fragile as stocks slid, tracking a steep Wall Street selloff, with investors worrying about global inflation and the Ukraine war.

"However, positive developments with Shanghai's Covid restrictions, and authorities backing more easing in the near future, supported the stabilisation of risk sentiment," Mizuho strategists said in a note to clients.

More Shanghai residents were given the freedom to shop for groceries for the first time in nearly two months on Thursday as authorities set out more plans for exiting the city-wide COVID-19 lockdown more fully.

The dollar index, which tracks the greenback against six major peers, nudged 0.03% lower to 103.77 after jumping 0.55% on Wednesday, ending a three-day losing streak.

"We argue that a turning point (for the U.S. dollar after recent gains) is close," George Saravelos, global head of foreign exchange at Deutsche Bank, said in a research note.

"Because we are now at a stage where a further deterioration in financial conditions undermines Fed tightening expectations, while there is still significantly more tightening to be priced in for the rest of the world, especially Europe," he added.

The euro was up 0.2% at 1.048 against the dollar.

Japan's yen, which lost ground versus the dollar in March and April, has been rangebound recently.

It fell 0.2% to 128.5 on Thursday.

On Tuesday, the Bank of Japan said it intended to stick with its dovish stance and maintain the current monetary stimulus to create sustainable increases in prices.

Robust economic data coupled with expectations of further monetary tightening supported the Australian dollar, which rose 0.2% to 0.6969 against the U.S. currency.

Australia's unemployment rate stood at its lowest in almost 50 years in April, a tightening in the labour market that will ratchet up pressure for further rate hikes.

The Canadian dollar is also on the rise after official data showed on Wednesday the annual inflation rate rose faster than expected in April, increasing pressure on the central bank to tighten policy quickly.

It was up 0.3% at 1.285 versus the U.S. dollar.

Bitcoin fell about 0.1% and was last trading at $29,232. Ether fell nearly 2.5% below $2,000. (Reporting by Stefano Rebaudo; Editing by Emelia Sithole-Matarise)