By James Ramage 

The dollar rose against the euro and the British pound on Thursday, as better-than-expected employment data and remarks from regional Federal Reserve presidents alluding to the need for higher interest rates lifted the U.S. currency from early morning losses.

The euro fell 1% to $1.0857 by late afternoon, from above $1.10 in the morning. The British pound slipped 0.3% to $1.4840, from more than $1.49. The dollar also rebounded against the Japanese yen to climb above Y119, but still traded 0.3% lower for the session at Y119.18.

The dollar turned higher after the Labor Department said initial U.S. jobless claims decreased by 9,000 to 282,000 in the week ended March 21. Economists had predicted the claims would total 290,000.

"The jobless claims number, one of the best readings in a while, helped keep a Fed rate hike on the horizon; that's helped pull the dollar higher," said Joe Manimbo, senior market analyst at Western Union.

The dollar also strengthened after Federal Reserve Bank of Atlanta President Dennis Lockhart told attendees of the Engage International Investment Education Symposium in Detroit that a strong U.S. economy meant that summer Fed meetings are "in play" for possible rate increases. Mr. Lockhart sits as a voting member on the central bank's policy-making committee this year.

Investors have poured into U.S. assets in hopes that the Fed would raise interest rates at a time when rival central banks were easing monetary policy and weakening their currencies. Higher U.S. rates would increase demand for the dollar, as they would boost returns on assets denominated in the currency.

In addition, Federal Reserve Bank of St. Louis President James Bullard reiterated past views that interest rates should rise soon, as the risks for holding them near zero for too long remained significant. Mr. Bullard isn't a voting member of the Fed's policy-setting committee this year.

The dollar has struggled to find traction to continue its ascent against rivals after the Fed suggested the currency was playing a role in slowing U.S. exports and growth at its monetary-policy meeting last week. The central bank also trimmed its forecast for U.S. inflation and growth at the meeting, pushing back market expectations for higher interest rates and sending the dollar lower against other currencies.

Next week, the markets will see the Fed's preferred inflation gauge, the measure for personal consumption expenditures, on Monday, as well as the jobs report Friday. The central bank uses both data points to set policy.

Write to James Ramage at James Ramage@wsj.com