The dollar was in the lead on Wednesday as it benefited from another set of positive U.S. data, while the euro struggled due to a dimming outlook for growth within the EU.
In an initial reaction, the Australian dollar rose by more than 0.5%. This was a knee-jerk response to Wednesday's higher-than expected inflation reading in Australia.
Data released on Tuesday revealed that the U.S. manufacturing sector had recovered from a five-month slump, while data released separately the same day showed that the euro zone business activity took a surprising turn for the worst this month.
The euro last traded 0.05% higher against the dollar at $1.0595 after falling 0.75% Tuesday.
The dollar index was lifted by the euro's decline and last settled at 106.23. This is a slight improvement from the one-month low hit the previous session of 105.35.
The dollar index measures the greenback in relation to a basket of currencies, and the euro is heavily weighted.
Tina Teng is a market analyst with CMC Markets. She said: "The eurozone economy has entered a kind of recession. This economic playout increases expectations that the European Central Bank may have (reached) a peak in interest rate."
The U.S. Federal Reserve may continue to increase interest rates despite the fact that economic data is strong.
The buoyant dollar has kept the yen near the 150-mark, and the Japanese currency is currently trading at 149.86 dollars per yen. Its price has mostly been sideways for the last month, keeping traders alert to any sign of Japanese government intervention.
As global interest rates increase, pressure is increasing on the Bank of Japan (BoJ) to change its control of bond yields. Sources said this week that a possible hike in a yield cap established just three months earlier is being discussed ahead of next week's meeting.
Sterling rose by 0.04% at $1.2165 while the New Zealand Dollar gained 0.08% at $0.5849.
The Australian dollar last traded at $0.6378, up 0.35%.
"The Reserve Bank of Australia (RBA) meeting in November is likely to take place live and the cash rate will be raised to 4.35%. Matt Simpson, City Index's senior analyst, said that he believes it will be a hawkish increase.
Bitcoin, the cryptocurrency, was last down 0.28% at $33,822, still holding close to a high of about 18 months that was reached on Tuesday.
This week the world's biggest cryptocurrency is on a tear, with a 10% increase on Monday. The speculation of an imminent exchange-traded Bitcoin fund has fueled this surge.
John Glover is the chief investment officer of Ledn, a crypto lender. He said that a growing spot ETF would always mean a growing cryptocurrency market.
"If Bitcoins are purchased to be used in ETFs, then the price will increase... it is possible that the launch one or more spot-ETFs could lead the next bull run for the entire cryptocurrency eco-system."