The dollar was on track for its biggest one-day jump in 18 months as investors assessed the prospect of a bigger gap in interest rates between the US and European central banks.
The buck was a big winner against the euro, which was undercut after the European Central Bank said at its policy meeting earlier today it would end its €2.4tn bond-buying programme by the end of the year but signalled any rise in interest rate rises was unlikely before the end of summer 2019.
This is contrast to the Federal Reserve, which yesterday raised the benchmark borrowing rate and said it expected to lift interest rates a total of four times in 2018, one more than its previous forecast.
The dollar index, which measures the greenback against a basket of international peers, rose by 1.1 per cent to 94.694 in afternoon trade in New York. That put it on track for its biggest one-day rise since December 15, 2016.
The ECB said that it would begin tapering its bond purchases in September to €15bn a month from €30bn at present before finally halting the quantitative easing programme at the end of next year.
The euro tumbled by around 2 per cent to $1.1603 on Thursday afternoon.
Also supporting the dollar, data showed US retail sales rose at their fastest pace in six months in May.