The dollar index, which measures the greenback against six currencies, rose 0.34pc to 97.622, its highest since June 2017. The euro was 0.33pc lower at $1.1218 after briefly slipping below the $1.12 handle for the first time in nearly three weeks.
The dollar was supported by data on Tuesday that showed sales of new US single-family homes jumped to a near 1-1/2-year high in March. The data follow recent positive news on retail sales and exports which have eased concerns of a sharply slowing US economy, analysts said.
"Today is certainly a good dollar day," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California. "The dollar is coming in full force and we have seen somewhat of a lower trend on the euro overall," he said.
Friday's US GDP data for the first quarter could strengthen the case that while the current period of global expansion is in its late stages, the United States is better placed than other leading economies.
"There's not a lot of fundamentals that support the dollar, it's more that there is a lot of concerns about the rest of the world," said Alfonso Esparza, currency strategist at OANDA in Toronto.
An uptick this week in oil prices on news of US plans to tighten a clamp down on Iranian oil exports from next month is also a positive for the dollar, said Silicon Valley Bank's Trang.
"If we do see a follow-through from higher oil prices to a little bit higher inflation I think you will see the Fed be in a position to be more stable with maintaining rates and eliminating any kind of conversation about rate cuts," he said.
With the US Federal Reserve on pause with interest rate hikes there has been some talk that the Fed will need to cut rates before long.
Sterling slid to a two-month low as hopes for a breakthrough in Brexit talks between the ruling and opposition parties faded and British Prime Minister Theresa May faced growing pressure to quit.
The Canadian dollar weakened to a nearly four-week low against its US counterpart on Tuesday as investors awaited a Bank of Canada interest rate decision on Wednesday.