The dollar had a shot in the arm this year from a steady stream of US interest rate rises. The Federal Reserve is expected to raise rates for a 14th straight meeting in January, taking its key rate to 4.5 percent, and more rises are seen possible.
The greenback has rebounded after a three-year, 30 percent decline driven by worries about the United State's ability to finance its growing trade deficit.
"In December 2004, US interest rates were at 2.25 percent and people were expecting them to top out at 3.0 percent - the Fed hikes this year have been the catalyst for an end to the dollar's bear run," said Kamal Sharma, currency strategist at Bank of America.
The dollar was trading around 117.77 yen at 1240 GMT, steadying from late US levels.
It recovered earlier losses against the yen made on selling by US brokerages in Tokyo ahead of the New Year holidays.
Financial centres in London, New York, Tokyo and Singapore will be shut on Monday and many centres close early on Friday.
The euro dropped to 2-1/2 week lows against the dollar at $1.1791 as US trading got under way, within half a cent of the single currency's 1999 launch levels of $1.1747.
Analysts said there was talk of last-minute repatriation of dollars by US corporates before the year draws to a close.
The Swiss franc rose against the dollar and hit one-week highs against the euro after the key Swiss KOF indicator rose to a 5-1/2 year high of 1.36 in December, well above forecast.
The greenback is on track for its best year since 1997, when the trade-weighted index rose 13 percent. A rise just above that would mark the dollar's best performance since 1984, when it rose 15 percent.
The dollar is also set for its largest rise over the course of a year against the euro since the single currency's launch in 1999. The dollar last rose around 15 percent against the yen in 2001.