The U.S. dollar fell to a 3-1/2 week low against a basket of currencies on Wednesday as traders bet more major central banks would begin reducing monetary stimulus in 2018 due to faster global economic growth.
In the cryptocurrency arena, Bitcoin's rebound following its worst week since 2013 fizzled as it struggled to stay above $16,000 for a second day.
"The dollar has taken quite a beating against the majors in 2017," said Minh Trang, senior foreign currency trader at Silicon Valley Bank in Santa Clara, California.
In holiday-thinned trading, an index that tracks the U.S. dollar against six currencies was down 0.24 percent at 93.04 after slipping to its lowest since Dec. 1 earlier Wednesday.
The dollar index has fallen 9.0 percent this year, putting it on track for its steepest annual decline since 2003 when it posted a 14.7 percent drop.
Conversely, the euro would post its best year against the greenback since 2003. The single currency reached a 3-1/2 week high on Wednesday at $1.1904, Reuters data showed. The euro was last up 0.30 percent at 1.1894.
The greenback weakened versus the yen for a second straight year. It held steady on the day at 113.29 .
"Traders have shifted their focus to central banks other than the U.S. Federal Reserve and whether they would reduce bond purchases or start raising interest rates next year," said Peter Chia, FX strategist for United Overseas Bank in Singapore.
"Against this backdrop, Japanese policymakers may at least start dropping more hints about an eventual tightening of the Bank of Japan's monetary policy," Chia said, adding that the dollar might slip to 108 yen by the end of March.
Bitcoin, down 3.87 percent at $15,136.34 on the Luxembourg-based Bitstamp exchange, struggled to rebound further after last week's rout. The biggest and best-known digital currency briefly traded below $15,000.
"Some people were nervous about it getting above $16,000 and began dumping it," said Greg Adamsick, director of global futures and options at RCM Alternatives in Chicago.
Meanwhile, oil prices surged to 2-1/2 year highs on Tuesday due to news of an explosion on a Libyan crude pipeline and voluntary OPEC-led supply cuts. Copper prices on Wednesday rocketed to 3-1/2 year peak.
Those developments bolstered demand for the currencies of commodity exporting countries, with the touching C$1.2627, its strongest level in three weeks.
The rose to $0.7776, its highest level in two months, it was last up 0.61 percent at $0.7774.