The dollar hit three-month peaks against the yen and Swiss franc on Wednesday as investors adjusted positions ahead of US inflation data and testimony by Federal Reserve chief Ben Bernanke later in the day.
US consumer price data for June, at 1230 GMT, could help prompt the Fed to raise rates again, after data on Tuesday showed a hefty rise in producer prices last month.
Talk of inflation risks from Bernanke could also boost expectations for an 18th consecutive rate hike from the Fed next month, to 5.5 percent.
The dollar is firm "on expectations for Bernanke and also the CPI in the wake of the stronger PPI number yesterday," said Adam Cole, senior currency strategist at RBC Capital Markets.
"Also there is a bit of a spillover from the rebound in equity markets that we've seen today, which is generally a more positive dollar background," he said.
By 1137 GMT, the dollar was up a third of a percent on the day at 117.62 yen, around three-month peaks. The US currency also hit its highest since late April against the Swiss franc, at 1.2566 francs.
Against a basket of currencies, it matched Tuesday's three-month peak of 87.19.
The euro was 0.1 percent weaker on the day at $1.2489, having earlier come to within 10 ticks of Tuesday's three-month low at $1.2472. Core US CPI is expected up 0.2 percent month-on-month in June, according to the median forecast in a Reuters poll.
Bernanke will give semi-annual testimony before the US Congress from 1400 GMT. However, with markets positioned for a tough statement - perhaps stressing concerns about inflation - analysts said there was scope for disappointment.
"Our guess is that he will steer a more neutral path this time, reiterating the line of the June FOMC statement, where they said that the future moves would be contingent upon the data flows," said RBC's Cole.
"Against the background of a market positioned for quite an upbeat statement, it could be quite disappointing." Traders said while the Fed continued to hike rates, the market's focus would remain on the dollar's rate advantage over other currencies.