USD weakened against most of its major counterparts in the European session on Thursday, as demand for safe-haven currencies reduced as worries about the U.S. debt-ceiling and energy-induced inflation eased.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, decreased 0.17% to 94.11.

Risk sentiment picked up, following the news of a potential concession on the U.S. debt ceiling, which came late Wednesday. Senate Republican leader Mitch McConnell offered a short-term suspension proposal to Senate Democrats. They were likely to accept the deal that would temporarily raise the U.S. debt ceiling “at a fixed dollar amount” and allow the government to keep operating until some point in December. This will allow the U.S. to avoid a historic default later this month. According to the estimates of the U.S. Treasury Secretary Janet Yellen, the government is to run out of money on October 18, and will not be able to service its existing debts, if Congress does not suspend or raise the debt ceiling. 

Meanwhile, energy prices retreated from multi-year highs, calming worries of higher inflation.