Analysts said low volume in markets this week may have exaggerated Tuesday's moves, pushing the dollar higher in the absence of some larger market participants.
The dollar has climbed almost 6 percent since Donald Trump was elected as U.S. president eight weeks ago, on expectations that his new administration will introduce reflationary measures backed by large fiscal spending, prompting the Federal Reserve to follow through with a series of interest rate hikes.
But with investors already pricing in between two and three hikes this year, analysts reckon they will want to see more evidence that growth and inflation are on the rise and that the pace of rate hikes will accelerate before putting on more bets on the dollar.
HSBC, nevertheless, changed their forecasts late on Tuesday to show the euro falling to $1.01 in the first quarter, down from $1.08 previously, though they reckon the dollar will then slip back for the rest of the year, never reaching parity.
The euro climbed 0.52 percent to $1.0458, boosted by data showing euro zone prices rose more quickly than expected in December and surveys suggesting business growth reached its highest in more than five years.
The dollar fell 0.05 percent against the yen to 117.68 yen.