The dollar strengthened more than 1% against the yen, pushing it above 139 yen per dollar for the first time since 1998. The last time it rose was 1.1% to 138.92 yen.
The euro was trading just above parity with the dollar, a day after breaking below the key level for the first time in nearly two decades.
The single currency remained under pressure on Thursday, weighed down by lowered official economic forecasts for the euro zone and political unrest in Italy.
The euro fell as much as 0.5% on the day and was down 0.4% at $1.00215.
Another hot set of US inflation data on Wednesday and an aggressive 100 basis point rate hike by the Bank of Canada the same day have stoked bets on faster policy tightening by the Fed, currency analysts said.
“The price action reflects growing fears that the Fed will throttle the US recovery by responding more aggressively to dampen upside inflation risks,” analysts at MUFG said in a note.
Traders have raised bets that the US central bank could raise rates by 100 basis points when it meets on July 26-27. An increase of at least 75 basis points is considered almost certain.
Sterling fell 0.4% to $1.18505 as concerns over the outlook for the British economy dominated despite data on Wednesday showing output unexpectedly grew in May.
By Iain Withers of Reuters news agency
Source: Ambito
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