The USD climbed back towards a 14-year high on Tuesday as the Japanese yen fell after the Bank of Japan held policy steady and fallout from attacks in Germany and Turkey subdued the euro.
European shares were steady, with unease over the attacks balanced by gains by bank shares and the Milan market.
On Forex market, risk aversion sent the safe-haven Swiss franc to a near a six-month high versus the euro and pushed the common currency firmly back below $1.04.
But the dollar and rising bond yields again dominated, after the head of the Federal Reserve flagged the strength of the U.S. jobs market in a speech to students on Monday.
That sent the greenback bouncing towards last week's 14-year high and it was at 103.40 on the index that measures it against other leading currencies, just short of its recent peak of 103.56.
The gains were strongest against the yen which slid around 1 percent after the Bank of Japan, shrugging off the yen's recent slump, said it would keep monetary policy loose.
Benchmark 10-year U.S government bond yields, which set the bar for global borrowing costs and have been rising hand-in-hand with the dollar over the last few months, were back above 2.58 percent.
The greenback has risen 12 percent versus the yen since Donald Trump's surprise presidential election victory, on his promises of increased fiscal stimulus. The win was made official on Monday after he got the required Electoral College votes.