The dollar rallied against the yen on Monday, breaking out of a 4-1/2 month range on expectations that upcoming U.S. economic data could give the Federal Reserve more reasons to raise interest rates more aggressively.
The U.S. currency also hit six-week highs against the euro, Swiss franc and sterling.
"The dollar remains better bid following last week's big adjustment in pricing of U.S. interest rate expectations, and euro/dollar remains at risk of a run at key support marked by the year's lows around $1.2730," said Daniel Katzive, currency strategist with UBS in Stamford, Connecticut, in a note to clients.
After its last policy meeting, the Fed flagged a pick up in inflation, causing the market to price in higher interest rates.
By early morning in New York, the dollar was up to 106.73 yen, up around 0.3 percent from late on Friday, after touching a high earlier of around 107.15 yen.
Technical analysts said the currency's break above key resistance at 106.86 yen during Asian trading hours had acted as a springboard for the dollar and it could climb even higher.
The euro fell to around $1.2930, down around 0.2 percent on the day, after dipping as far as $1.2889 -- its lowest level since Feb. 14.
Analysts said that U.S. economic reports due this week could show that inflation has indeed picked up in recent months, as the Fed noted last week when it raised interest rates for the seventh time to 2.75 percent.
Higher U.S. interest rates tend to support the dollar since they make returns on short-dated dollar-denominated debt more attractive to global investors, although higher inflation could ultimately be detrimental to economic growth and weigh on the currency.
"While markets could of course move to price in even more aggressive tightening if price data continues to surprise on the upside, risks are now much more symmetrical," said Katzive.
Sterling was down about 0.3 percent at $1.8596, after touching a session low of $1.8595.
The dollar was up 0.1 percent at around 1.2009 Swiss francs, after rising to its highest mark since Feb. 14.
European markets will stay closed for Easter holidays.