The euro sank below $1.08 for the first time in almost 12 years on Tuesday, as the latest round of dollar gains brought into focus a run towards parity that most major banks had not expected until next year.
The yen also fell, burdened by efforts to revive inflation in Japan as well as by the grim outlook for most of the world economy outside of the United States.
An almost 5 percent fall in factory prices in China drove the Australian dollar to an almost six-year low - giving another boost to its U.S. counterpart against a basket of major currencies.
Several major banks have forecast the dollar will be worth as much as the euro next year or in 2017. But even allowing for the launch of euro zone quantitative easing, Reuters polling shows most had not expected the euro to fall to $1.08 for another six months.
Another round of dollar buying since a perceived change to a less cautious tone from the U.S. Federal Reserve has driven the greenback up another 5 percent in less than two weeks. It traded as high as $1.07345 on Tuesday.