The euro fell sharply on Friday after European Central Bank chief Mario Draghi signaled the organization could launch further monetary easing.
The US dollar has recovered from session lows of 117.75 yen, while the euro fell slightly from around $1.255 to $1.245.
The greenback will rise steadily against each of its major counterparts in the next year as the Fed looks to raise rates, according to HSBC's David Bloom.
The US dollar was slightly weaker against the euro and the yen after the Federal Reserve released the minutes of last month's meeting.
The U.S. dollar weakened against the euro on Tuesday on a better than expected survey of German sentiment.
The yen recovered from seven-year lows against the dollar but remained under pressure after data showing Japan's economy slipping into recession.
The Japanese yen left many currency experts wrong-footed on Monday with a seemingly unstoppable depreciation coming to an abrupt halt.
The dollar rallied on Friday, helped by unexpectedly strong U.S. retail sales data and a slide in the yen to seven-year lows.
Dollar moved towards a seven-year high against the yen, driven by speculation that the Japanese Prime Minister will call a snap election.
Soc Gen's Albert Edwards believes the Japanese currency will sink to 145 yen against the dollar by April, forcing devaluations across Asia.
Britain's pound slouched near recent 14-month lows against the dollar as investors pushed back rate-hike expectations to the fourth quarter of 2015.
The dollar climbed to a seven-year high against the yen as Prime Minister Abe is likely to delay a planned sales tax increase.
The dollar fell for a second straight session on Monday in quiet trading as investors took more profits on earlier steep gains.
The dollar slipped on Friday after a solid but below-expectation October U.S. jobs report.
The Russian central bank said it was prepared to support the ruble in foreign exchange markets after it tumbled to new lows on Friday.
The euro plunged to its lowest in more than two years against the dollar on Thursday.
The dollar nursed modest losses on Wednesday as investors took some profits on a four-session rally that swept the greenback to multi-year highs.
The euro rallied on Tuesday on a report citing internal tensions within the European Central Bank over the leadership of its chief, Mario Draghi.
The dollar topped 114 yen on Monday, its highest level in nearly seven years, extending gains spurred by the Bank of Japan's decision last week.
The yen tumbled to its lowest level in nearly seven years against the dollar, putting it on track for its biggest losses in 18 months.