The safe-haven U.S. dollar languished near three-year lows versus riskier currencies on Thursday as continued dovish signals from the Federal Reserve stoked reflation bets.

The greenback sank to a fresh low against the Australian dollar, and held near lows set overnight against its British, Canadian and New Zealand peers.

Fed Chair Powell reiterated on Wednesday that the central bank wouldn't adjust policy until the economy is clearly improving, and will look through any near-term spike in inflation. The remarks to the House of Representatives Committee on Financial Services mirrored his testimony before the Senate the day before.

"Powell made it very clear that the improvement in the economic outlook thus far will not instigate the Fed to tighten monetary policy," National Australia Bank foreign exchange strategist Rodrigo Cattrill wrote in a client note.

"The punch bowl ain't going anywhere anytime soon and the policy backdrop should remain supportive for risk assets for some time."

Easy financial conditions, the promise of fiscal stimulus and an accelerating COVID-19 vaccine rollout have driven money into what's come to be known as the reflation trade, referring to bets on an upswing in economic activity and prices.

Commodity-linked currencies are placed to benefit from a pick-up in global trade, while investors have also cheered Britain's progress in recovering from the coronavirus pandemic.

Australia's dollar rose 0.1% to $0.79717 on Thursday in Asia after earlier touching a fresh three-year high of $0.7975. 

The New Zealand and Canadian dollars traded just off Wednesday's multi-year highs.

Sterling was little changed at $1.4143 after pushing to the cusp of $1.43 overnight for the first time since April 2018.

The euro traded near the top of its recent range at $1.2168, near the almost one-month high of $1.2180 touched earlier this week.

The dollar strengthened though against other traditional safe haven currencies, rising 0.1% to 105.94 yen for a third day of gains. It held near the three-month high of 90.945 Swiss francs reached overnight.