U.S. Treasury Secretary Steve Mnuchin and House of Representatives Speaker Nancy Pelosi held stimulus talks for the first time since the Nov. 3 election. A bipartisan group of senators and House members proposed $908 billion worth of coronavirus relief measures.
Later on Wednesday, data including the U.S. ADP national employment data and European Union unemployment rate are due.
"We have ADP employment data as the only standout in the US calendar today, which should provide some direction for market expectations ahead of Friday’s payrolls," said FX strategists at ING in a note to clients.
"Still, data is clearly playing second fiddle to vaccine and stimulus news. Markets may retain an upbeat stance on the latter for now as bipartisan talks resume, providing further support to risk assets and reinforcing the bearish dollar argument."
In early trading in London, the euro set a 2020 high of $1.2088 against the dollar, its highest since April 2018. It last traded at $1.2060.
The European Central Bank meets next week, and analysts say the euro could be pressured as investors worry the ECB will act to curb its rapid rise.
Jordan Rochester, FX strategist at Nomura, said the euro/dollar may struggle for two reasons: speculative positioning profit-taking and the possibility the ECB will cut interest rates next week.
The Bank of Japan's deputy governor signalled the central bank was ready to extend pandemic-response programmes, saying it would "take additional easing steps without hesitation as needed."
Against the Japanese yen, the dollar rose 0.3% to 104.55.
Sterling fell after headlines the UK's post-Brexit trade deal with the European Union "still hangs in balance".
The EU's Brexit negotiator told the 27 national envoys on Wednesday that differences in UK trade talks persisted, according to a senior EU diplomat who was present at the closed-door briefing.
The pound last traded half a percent lower to the dollar at $1.3354.
The risk-sensitive Aussie gained to 0.7376 per dollar after data showed Australia's economy rebounded more than expected in the third quarter.
The New Zealand dollar traded at $0.7056, near two-and-a-half-year highs.
The onshore yuan last changed hands at 6.5587 per dollar.
(Reporting by Ritvik Carvalho; additional reporting by Eimi Yamamitsu in Tokyo; editing by Larry King) ((Ritvik.Carvalho@thomsonreuters.com; +44 2075429406; Reuters Messaging: firstname.lastname@example.org))