Banks said that "long" positioning behind the dollar showed the extent of conviction that it would continue to rise, but one big question for the rally will be the fallout in other markets of some of the preconditions for a stronger U.S. currency.
The prospect of less monetary stimulus and higher U.S. interest rates drove a shocking sell-off on emerging markets at the start of this year and Wall Street's losses overnight had similar roots.
The dollar stumbled on that but it recovered against the yen at least after Japan's Welfare Minister Yasuhisa Shiozaki denied media reports that suggested Tokyo would delay reforming its $1.26 trillion Government Pension Investment Fund (GPIF).
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Traders were watching for any sign of Japanese officials trying to check the weakening in the yen, after Prime Minister Shinzo Abe said earlier this week that he would carefully watch the impact of the yen's fall to a six-year low.
"Many in the market feel the authorities won't start verbal intervention until dollar/yen rises above 110," said Masashi Murata, a senior currency strategist at Brown Brothers Harriman in Tokyo.
"Abe did touch on the yen this week, but fundamental demerits of a weaker currency are yet to stand out. For example prices of gasoline, crucial to regional economies, have not risen despite a depreciating yen, and he may have spoken merely to counter his critics," he said.
The dollar rose 0.2 percent to 108.985 yen after slipping to as low as 108.47, off this week's six-year highs above 109 yen.