The dollar traded near the strongest in more than six weeks against the euro amid bets the Federal Reserve will slow asset purchases on signs the world’s biggest economy is accelerating.

The greenback rose versus all of its 16 most-traded peers last week as U.S. retail sales unexpectedly gained and a consumer-confidence gauge climbed. The euro dropped against the dollar by the most in almost two months as the currency bloc’s economy shrank for a sixth straight quarter. The dollar declined against the yen today, retreating from a more than four-year high. Fed Chairman Ben S. Bernanke testifies to Congress this week on the economic outlook.

“There’s been a lot of excitement about the U.S. economic data,” stated by a foreign-exchange strategist of a bank.He added “So far, the interpretation of any tapering has been quite hawkish. The dollar is riding on optimism rather than a significant shift in fundamentals.”

The greenback rallied 5.4 percent this year as of May 17, the most among 10 developed-market currencies. The euro has advanced 2.3 percent, while the yen fell 13 percent in the largest loss.

The Australian dollar rose 0.3 percent today to 97.60 U.S. cents, after tumbling 2.9 percent last week in the biggest drop among the Group of 10 currencies.

The U.S. dollar extended gains after Fed Bank of San Francisco President John Williams said May 16 that quickening economic growth and gains in the job market may prompt the central bank to begin tapering its bond buying as soon as this summer. Williams was one of the first Fed officials to advocate open-ended bond purchases. Philadelphia Fed Bank President Charles Plosser said a week earlier he’d favor a June reduction.

The Fed is buying $85 billion a month of Treasury and mortgage bonds to push down borrowing costs and spur growth. Bernanke is scheduled to speak to the Joint Economic Committee of Congress on May 22. Minutes of the Fed’s last policy meeting will be released the same day.

“It’s the U.S. economy that’s in the vanguard, and that explains why the dollar continues to advance,” said by a chief economic strategist. “You also have very much in the forefront that the Federal Reserve might exit its quantitative easing sooner than later, while the Bank of Japan is going to do more QE and the European Central Bank is favored to do more.” He added.

The euro fell for a second week against the greenback as data showed gross domestic product in the 17-nation area shrank 0.2 percent last quarter. ECB President Mario Draghi pledged on May 2 to lower rates again if needed following a cut in the benchmark to 0.5 percent.