The greenback edged down on Thursday, dipping to the lowest level in four months, as trade tariff uncertainty loomed, the euro soared in response to Germany's fiscal announcement.

The dollar index that gauges the greenback versus its major pairs slumped by 0.1% to 104.180, close to its lowest level not seen since last October.

The dollar weakened following U.S. President Donald Trump's decision to grant a one-month exemption to U.S. automakers from recent tariffs imposed on Canada and Mexico. Additionally, reports indicated that Trump was evaluating the possibility of exempting agricultural products as well.

The decision sparked expectations that Trump's tariff plans might be less impactful than originally feared, enhancing risk appetite and leading more traders to shift away from the dollar.

EUR/USD edged up by 0.2% to 1.0809, reaching four-month highs, the market responded to the German government's decision to ease fiscal regulations and introduce a 500 billion infrastructure fund.

The euro is set for its strongest weekly performance since March 2009, though the upcoming policy decision from the European Central Bank later in the session could influence this momentum.

GBP/USD advanced by 1.2898, hitting a level that was last seen in four months ago.

USD/JPY slid by 0.6% to 148.07, the pair dropped to its lowest level in nearly five months as demand for the yen surged due to heightened trade tensions.