The dollar hit a 13-month peak against the yen and a one-and-a-half month high versus the euro this morning.
The dollar's rise comes as investors waited for US data to help gauge the chances of a Federal Reserve interest rate cut later this year.
A string of solid US economic data over the past week has boosted expectations that the Fed will be in no hurry to lower the funds rate from 5.25 per cent, as many had expected towards the end of 2006.
Investors will examine over a retail sales report for December at 1.30pm for more clues on the strength of the US economy and the Fed's future policy path.
Economists expect the headline retail sales number to show a 0.6 per cent rise in the holiday shopping month of December, slowing from the robust 1.0 per cent increase in November.
The euro extended its slide a day after European Central Bank President Jean-Claude Trichet failed to signal a February rate rise in comments made after a policy meeting.
The ECB left rates at 3.50 per cent at the meeting yesterday, as expected, but many market players had hoped for a clear signal for a rate rise next month.