The US dollar surged higher at the start of European session trading, following a surge in US treasury yields supported by the prospect of a faster economic recovery and the possibility of rising inflation.
Against a basket of major currencies, the dollar index rose after rising from a two-week low, trading around 90.75.
The giant currency also jumped to a five-month high against the Japanese yen which is sensitive to movements in US bond yields.
Soaring US bond yields have pushed up the greenback dollar, with 10-year yields rising to a high of 1.333% from around 1.20% it reached last weekend.
Euro trading remains around the price of 1.20000 despite growing optimism ahead of former European Central Bank (ECB) president Mario Draghi's speech as Italian Prime Minister. He is expected to deliver his policy priorities in the Italian Senate today.
In addition, the pound is trying to keep from falling lower with market confidence in a strong economic recovery following widespread vaccination measures continuing to support the currency.
However, due to the strengthening of the US dollar, the pound sterling had to retreat from the nearly three-year high it reached on Tuesday.
Markets in the European session, shown by UK inflation data showed a better-than-expected increase in market expectations in January.
Meanwhile, the publication of US retail sales data tonight and the meeting minutes report early in the morning will be the main focus of the market today.
