The dollar maintained its strong tone on Friday ahead of the release of key capital flows data that will give an indication of how the United States is financing its gaping current account deficit.
A sharp drop in capital inflows could turn the focus of the market to negative structural factors like the U.S. budget and current account deficit and away from the near-term cyclical positives of potential monetary policy tightening.
Worries about the ability of the United States to finance its gaping current account deficit pushed down the dollar to a record low versus the euro at the end of last year and to a five-year low against the yen in January.
The U.S. capital flows figures, due at 1300 GMT, are forecast to show the country attracted $65 billion in foreign capital in February.
Though that figure would be down from $91.5 billion in January, it would be above the roughly $55 billion needed each month to cover the current account deficit.
"If it is particularly bad then we may see moderate selling. But the market is focusing on cyclical factors rather than on funding," said Derek Halpenny, currency economist at Bank of Tokyo Mitsubishi.
"Next week's PPI (Producer Price Index) and CPI (Consumer Price Index) will be of far greater significance than today's TICs report," he said.
Next week's inflation reports will offer clues about price risks and any sudden jump could pile pressure on the Federal Reserve to tighten monetary policy more aggressively.
The widening yield gap between benchmark U.S. Treasuries and euro zone government bonds has been a key factor supporting the dollar in recent weeks.
The dollar has risen about 5.3 percent against the euro and the yen this year, benefiting from the interest rate advantage it has over currencies in countries where rates are not expected to increase any time soon.
The Federal Reserve has raised rates by a quarter percentage point seven times since June, bringing its funds rate to 2.75 percent.
At 0756 GMT, the euro was up 0.2 percent at $1.2829 against the euro, after hitting two-month lows of $1.2766 on Thursday. The dollar was flat against the yen at 108.30.