Revised figures on Tuesday showed the U.S. economy grew at an annualized 5.0 percent clip in the third quarter, its quickest pace in 11 years.
"When you look at the strong U.S. GDP numbers, you really have no choice but to buy the dollar," said Takahiro Suzuki, vice president of forex at Nomura Securities. "I think the euro could fall below $1.20 as soon as January."
Read MoreAs American economy roars, US dollar soars
The upbeat data drove U.S. stocks to yet another record close and prompted another move higher in U.S. yields. The two-year yield jumped to 0.747 percent, reaching a high not seen in almost four years.
Traders suspect U.S. yields will rise even further as markets fine tunes expectations of the timing of an eventual rate hike, a factor that is likely to underpin the greenback.
The dollar index is up more than 12 percent so far this year, on track for its best annual performance in nearly a decade. To be sure, the rally only took off in the second half of 2014, a long time coming for those who had turned bullish this time last year.
The 'buy-the-dollar' trend should persist given little incentive for investors to look at either the euro or yen with central banks in the euro zone and Japan under pressure to stimulate economic growth.
Traders said a risk to this outlook came from Russia, where the ruble currency recently went into a tailspin, sparking fears of contagion across emerging markets.