A run of strong economic data boosted bets for earlier Federal Reserve interest-rate hikes, as the US dollar hit a new high against the yen since March 2017 and traded close to a 16 month peak against a basket of major peers on Wednesday.
Australia's dollar fell after wage data failed to strengthen the case for tighter monetary policy.
The dollar was as high as 114.975 yen before changing hands at 114.755 last time.
The dollar index - which measures the currency against six rivals including the yen -- was trading at 95.871, not far from the overnight high of 95.978, a level not seen since July of last year.
The U.S. retail sales rose more than expected in October, a report showed Tuesday, building on momentum from last week when consumer prices surged at the highest rate since 1990.
St. Louis Fed President James Bullard said on Tuesday that the central bank should follow a more hawkish direction over its next couple of meetings in order to prepare for inflation.
Money markets are currently pricing in a high probability of a Fed rate increase in June, followed by another in November.
Westpac strategists wrote in a client note that the dollar index should be bought on any dips into the low 95 level because the U.S. economy looks to have shaken off the Delta soft patch and is gaining forward momentum despite heavy ongoing supply chain issues and reopening bottleneck.
Hawkish comments from Bullard voter next year will leave markets comfortable with pricing in Fed hikes in 2022, a contrast to Europe where renewed virus suppression measures are being implemented. The euro languished near a 16 month low to the dollar as Europe struggled with worries about growth amid a renewed surge in COVID 19 cases.
The parliament of Germany is due to vote on stricter measures to deal with the outbreak while Austria imposed a lock-down on unvaccinated people at the beginning of the week. France, the Netherlands, and many countries in Eastern Europe are struggling to contain infections.
European Central Bank President Christine Lagarde spoke later on Wednesday, after saying on Monday that tighter monetary policy is now in place to rein in inflation could choke off the euro zone's recovery.
One euro last night bought $1.13245, mostly flat from Tuesday, when it dropped as low as $1.1309 for the first time since July 2020.
After the government's job protection scheme ended, sterling was firm after the release of data showing British employers hired more people in October.
Consumer price data is being parsed by traders later Wednesday for further support for Bank of England tightening.
After rising as high as $1.3472 overnight, sterling was barely changed at $1.34335.
It rose slightly to 0.8429 per euro, moving back toward its strongest level this month, reached on Tuesday at 0.84265.
The Aussie sank 0.24% to $0.7287 after wage growth data came in as economists expected on Wednesday, doing nothing to sway a dovish Reserve Bank of Australia.
On Tuesady, RBA Governor Philip Lowe pushed back against market pricing for a rate hike next year, saying recent data and forecasts did not warrant such a move.
After dipping below that level for the first time this month, cryptocurrencies traded just north of $60,000. It reached a new record $69,000 on Wednesday of last week.