The dollar rallied on Wednesday on upbeat U.S. manufacturing and construction data and after minutes from the Federal Reserve's last policy meeting showed the central bank remained on track to raise interest rates several times this year.
Snapping a three-week losing streak, the dollar hit session highs against the euro and yen after the minutes from the Fed's Dec. 12-13 meeting.
The dollar index posted its largest daily gain in more than two weeks.
The Fed's minutes acknowledged the U.S. labor market's solid gains and the expansion in economic activity, even as they affirmed policymakers' worries about persistently low inflation.
That suggested the central bank will continue to pursue a gradual approach in raising rates but could pick up the pace if inflation accelerates. Fed officials also discussed the possibility that the Trump administration's tax cuts or easy financial conditions could cause inflation pressures to rise, leading to some dollar-buying, analysts said.
"The debate is the same. You have strong growth and low unemployment on one side and surprisingly low inflation on the other side," said Stephen Stanley, chief economist at Amherst Pierpont Securities in Stamford, Connecticut. "They have been taking a middle-of-the-road on their policy approach, gradually raising interest rates and unwinding the balance sheet. They will continue the same tack."