The dollar rose on Tuesday to a fresh 20-year high against the Japanese yen and tested a two-year peak against the euro, supported by high U.S. Treasury yields.
Ten-year U.S. inflation-linked bond yields are within touching distance of turning positive for the first time in two years.
The dollar index, which measures the greenback against six other currencies, climbed past 101 for the first time in more than two years. It settled at 100.98.
The dollar's gains have been most striking against the yen, climbing to its highest level against the Japanese currency since May 2002. It was last up 1.49% at 128.86 yen.
The euro recovered some grounds, trading 0.06% higher against the dollar at $1.0787, but stayed just off last week's two-year low of $1.0756.
"Policy divergence between the Fed and low-yielding central banks (European Central Bank, Bank of Japan) continues to argue in favor of USD strength," said Francesco Pesole, FX Strategist at ING.
Expectations that the U.S. Federal Reserve will tighten its monetary policy have continued to provide support to the dollar.
U.S. inflation is "far too high", St. Louis Federal Reserve Bank President James Bullard said on Monday as he repeated his case for increasing interest rates to 3.5% by the end of the year.
Elsewhere, sterling fell 0.09% to $1.2996, in sight of its 17-month low against the dollar of $1.2973 hit last week.
European currencies weren't helped by the latest fighting in Ukraine
The Australian dollar rose from Monday's one-month low and was at $0.737, given some support by minutes published Tuesday from the Reserve Bank of Australia's April policy meeting, which suggested the central bank was edging closer to raising interest rates for the first time in more than a decade.