The dollar climbed against a basket of major currencies on Tuesday, recovering further from last week's decline to the lowest in more than three months, which drew bargain hunters.
The dollar index, which measures the greenback against six rival currencies, was up 0.25 percent at 92.59. The index fell to 91.751 on January 2, its lowest since September 20.
"I think we came into this week with the dollar having been beat up over the better part of the last four weeks," said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.
"A lot of the dollar selling that carried over from late 2017 and into this year was probably a little bit overdone," he said.
The euro extended losses from the previous session and slipped 0.38 percent to $1.192. On Thursday, it had hit a nearly four-month high of $1.2089.
"We are seeing a little bit of the optimism surrounding the euro fade a little," Esiner said.
"While euro zone data continues to paint a picture of an economy that closed out 2017 with very strong momentum, there continues to be a significant lack of inflation that will ultimately keep the pace of ECB normalization very, very cautious," he said.
In recent weeks, the euro rallied on expectations for a shift in European Central Bank monetary policy this year, but weakened after Friday's cooler-than-expected reading of the euro zone's December consumer price index.