The US dollar extended its gains to a one-week high at the start of the European session as the market heads to the end of trading for the first month of 2023.
The dollar index, which measures the greenback's strength against six other major currencies, jumped 0.3% to trade at around 102.55.
Even so, so far there is no clear factor that drives the increase displayed by the king of the currency.
Despite the gains, the currency king is on track for a fourth consecutive monthly loss with a decline of almost 1%.
This follows the hawkish stance of the Federal Reserve (Fed) which is gradually shifting to less aggressive in setting interest rate hikes.
Markets are setting expectations for an increase of 25 basis points at the FOMC policy meeting that will take place early Thursday morning.
Following developments in other major currencies, the euro slipped lower as the US dollar's recovery saw it trade around 1.0800, while the pound eased to 1.2310 against the greenback.
Investors in both currencies limited their positions ahead of the Bank of England (BOE) and European Central Bank (ECB) policy meetings on Thursday.
On the other hand, the Aussie and New Zealand dollars also declined in the European session as investors' focus turned to the publication of New Zealand's employment data on Wednesday.
The yen was little changed amid uncertainty over the stance of the Bank of Japan (BOJ) whether it will maintain its loose policy or move towards tightening.
Additionally, the Canadian dollar slipped lower ahead of the release of Canada's gross domestic product (GDP) data in the New York session.
Overall, the market is still cautiously awaiting key data and central bank meetings this week.
