The euro sank below $1.08 a dollar today, hitting a 12-year low on a surfeit of euros after the first round of European bond-buying, and a firmer dollar pushed down other major currencies, including the Japanese yen and the Indian rupee.
Today's gains brought the greenback nearly on par with the euro while the yen fell to 122.04 against the dollar and the Indian rupee was trading at a two-month low of 62.81 to a dollar.
The dollar rose to its highest level since July 2007, to hit a high of 122.04 yen, bouncing from an overnight low of 120.615 a dollar.
The rupee was further burdened by fears of an early rate hike by the US Fed, which could cause a reverse flow of funds from the Indian equity markets.
The US dollar was also boosted against a basket of currencies with the Australian dollar also hitting a six-year low after an almost 5 per cent fall in manufacturing prices in China.
While several major banks have forecast the value of the US dollar to equal that of the euro by next year or the latest by 2017, the launch of euro zone quantitative easing seems to have quickened the pace.
A fresh round of dollar buying by the Federal Reserve has driven the greenback up another 5 per cent in less than two weeks. In fact, the dollar hit a high of $1.07345 against the euro today – the lowest since September 2003.
The dollar was also boosted by last week's strong US job data, which pointed to an interest rate hike by the Federal Reserve as early as mid-year.
The euro was also weighed down by the continuing uncertainty over Greece's debt situation and the decline in yields of key euro zone debt like German bunds following the launch of ECB's bond-buying.
The European Central Bank and Bank of Japan, on the other hand, have embarked on monetary expansion plans and are committed to carrying out their individual bond-buying programmes.