The euro rose broadly on Monday, as euro zone banks repatriated foreign-held assets before year-end and after the European Central Bank chief said there was no urgent need to cut interest rates.
The euro's strength this year has baffled many commentators and investors, who had expected tough economic conditions in some member states to weigh on the single currency.
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But the euro has been boosted as banks in the region repatriate funds ahead of the year-end to shore up their capital bases before an ECB Asset Quality Review and as banks repay cheap crisis loans to the ECB, which results in tighter liquidity.
In addition, ECB President Mario Draghi said in an interview with German news magazine Spiegel published on Saturday that he sees no urgent need to cut the euro zone's main interest rate further and no signs of deflation.
"The comments were supportive of the euro in otherwise eventless trading activity. Capital flows and elevated money market rates continue to support the euro as well," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
The euro was up 0.4 percent against the dollar at $1.3797, having shot up as high as $1.3892 in thin year-end trade on Friday, its highest level since October 2011. It has risen more than 4 percent against the dollar in 2013 and is set for a second straight year of gains.
The euro was up 0.4 percent against the yen at 144.98 yen, having hit a five-year high of 145.675 yen on Friday, with the Japanese currency weighed down by expectations the Bank of Japan will announce more money printing.
Many commentators think the euro could weaken early in 2014 once the Asset Quality Review is out of the way.
"We remain skeptical of euro strength and will be watching funding rates in the first days of the new year for signs that the liquidity squeeze which supported the euro mid-December is continuing to fade," BNP Paribas analysts said in a note.
The euro was down 1.2 percent against the Swedish crown at 8.8496 crowns after November retail sales in Sweden rose more than expected.
The dollar hit 105.415 yen, its highest level since October 2008, in Asian trading but gave back gains to trade down 0.1 percent on the day at 105.08 yen.
The yen has been the weakest major currency this year, weighed down by the BOJ's pledge to keep interest rates low.
The dollar has gained 21 percent against the Japanese currency while the euro, the strongest major currency in 2013, has risen 26 percent.
Morgan Stanley's head of global currency strategy, Hans Redeker, cited the Bank of Japan's plans to increase its balance sheet and Japanese investors buying euro zone government bonds as weighing on the yen.
But he added: "It's a very thin marketplace, so it only needs a bit of liquidity to take the market into some type of significant price action."