USD traded mixed against other major currencies in the European session on Thursday amid persistent concerns about global growth slowdown, growing inflation, and the withdrawal of the Fed's economic support.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, increased 0.10% to 94.44, hovering near its one-year high of 94.50, which was reached early today.

Growth concerns heightened after the latest data out from China showed an unexpected slowdown in the country’s manufacturing activity this month. According to the data, the Chinese manufacturing PMI fell to 49.6 in September from 50.1 in the previous month, slipping into contraction territory for the first time in 18 months. However, the non-manufacturing PMI rose to 53.2  from 47.5 in August, returning into expansionary territory.

Meanwhile, worries over a potential federal government shutdown in the U.S. faded as the Senate agreed to vote Thursday morning on legislation that will fund the government through to early December that is expected to be supported by lawmakers from both parties in both chambers of the U.S. Congress. The approval of the legislation will allow avoiding a government shutdown on Friday. Meanwhile, the fate of the looming debt ceiling remains uncertain.

Both Fed Chair Powell and Treasury Secretary Yellen will testify before the House Financial Services Committee later today. Speaking at the event hosted by the ECB on Wednesday, Jerome Powell stated that he was frustrated by persistent inflation, but reiterated his view the price pressures would ease eventually.