The US dollar rose to a three-week high against a basket of major currencies after US retail sales data showed the biggest jump in seven months.
The gains were also bolstered by news that North Korean leader Kim Jong-un was postponing a decision to fire rockets into the US Pacific island of Guam. Markets saw this as new evidence that the threats were nothing more than rhetorical.
The dollar rose more than 1 percent against the yen, touching a one-week high and heading for its biggest daily gain against the Japanese currency since July 3. The euro fell to its lowest level against the dollar since July 28.
The dollar index was up 0.45 percent at 93.848 after touching earlier highs since July 26. The greenback was steady against the Swiss franc after rising more than 1 percent on Monday.
While the pound fell after British inflation figures fell slightly below expectations, pushing the currency out of key support levels against both the euro and the dollar. Sterling fell 0.75 percent to $ 1.2863.