The dollar consolidated gains after hitting a one-month high earlier today against a basket of currencies.

The dollar has gained more than 1.2% against a basket of currencies and is on track to post its best weekly performance this year on hopes that US President Donald Trump's administration may be making progress on tax reforms.

The dollar has gained 2.5% since hitting a two and a half low in the middle of September. But on an annual basis, the dollar was poised for its biggest drop since 2004. 

Shortly before 6pm the euro was worth $1.1782 - up 0.33% on the day.

The tax proposal faces an uphill battle in the US Congress, with Trump's own Republican Party divided over it and Democrats hostile. 

But the plan's release, along with recent hawkish rhetoric from the US Federal Reserve, has raised the likelihood of a US rate increase by December to 70% compared with less than a third a month earlier. 

Analysts said that this is probably the best time for the US to raise interest rates, as short-term growth indicators look robust and market volatility is near record lows and financial markets healthy and near record highs. 

The dollar's gains were more pronounced against currencies where the domestic story has worsened in recent days, such as the euro and the Japanese yen. 

Japanese Prime Minister Shinzo Abe called a snap election as the main opposition Democratic Party threw its support behind a fledgling party led by Tokyo's popular governor, Yuriko Koike, in the October 22 vote. 

Meanwhile, the euro has struggled this week after the unexpected outcome of the German elections.