By Deborah Levine & William L. Watts, MarketWatch NEW YORK (MarketWatch) -- The dollar turned higher Thursday, gaining after a pair of economic reports showed that the U.S. trade deficit unexpectedly shrank and that initial claims for jobless benefits fell. The dollar index (DXY 80.48, +0.04, +0.05%) , which measures the U.S. unit against a trade-weighted basket of six major currencies, rose to 80.542 after the data, up from 80.484 late Wednesday, and then backtracked modestly to stand at 80.495. The euro fetched $1.3643, turning slightly lower after the data and from $1.3649 amid a lack of major economic data. The dollar changed hands at 90.48 Japanese yen in recent activity, compared to 90.55 yen on Wednesday. Getting factored into the action in currencies, the Labor Department said first-time claims for unemployment benefits fell to a seasonally adjusted 462,000 in the week ended March 6, down from a revised 468,000 in the prior week. Economists surveyed by MarketWatch had been initial claims of 460,000. Read about jobless benefits. "Anecdotal and statistical evidence on the labor market has been encouraging recently," said Omair Sharif, economist at RBS. "We anticipate that initial claims, which have lagged the improvement seen in other job market figures, will soon resume the downtrend that was in place for much of 2009." Separately, the Commerce Department said the U.S. trade deficit shrank a seasonally adjusted 6.6% in January, narrowing to $37.29 billion from $39.90 billion in December. Analysts had anticipated a slight increase. See more on trade deficit. Some of the dollar's gains reversed as trading wore on, keeping many currency crosses within well-worn trading ranges. Investors are trying to balance economic data that continue to be uneven in many countries amid uncertainty of some countries' debt problems, namely Greece. Referring to the action in the euro, strategists at KBC Bank in Brussels wrote: "The sideways trading range ... between $1.3433 and $1.3850 is still perfectly in place and we don't see a trigger to unlock this stalemate any time soon. Next week's Fed meeting might be the next milestone." Speculation has been rife in financial markets of late about when the Federal Reserve might be prepared to tighten U.S. monetary policy. The euro, which had come under heavy pressure amid fears that Greece would default, has stabilized since falling to a nine-month low against the dollar last month. Bears contend more pain is in store for the single currency amid ongoing debt woes in Greece and elsewhere in the euro zone. "While the [European Union] may be happy with the budget deficit strategy that Greece has proposed, the economic repercussions of this public retrenchment are likely going to have a wholly negative impact on the recovery," wrote Jessica Hoversen, currency strategist at MF Global in Chicago. "The Greek government can't completely change the way Greece has been operating without expecting either social unrest or a difficult adjustment period," she said. "This goes for all the peripherals." MF Global is targeting a fall in the euro to $1.25 by the end of the third quarter. Also briefly weighing on the euro Thursday, the Swiss National Bank said it would continue to "act decisively to prevent an excessive appreciation of the Swiss franc against the euro." See full story on Swiss national bank's latest announcement on interest rates and the franc.

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