On Monday, the dollar traded around a two-and-a-half-week high against key peers, as rising US inflation bolstered the case for early Federal Reserve interest rate hikes ahead of a policy meeting on Wednesday.

The dollar was approaching a one-and-a-half-week high against the yen. The safe-haven Japanese yen fell after the ruling party's strong performance in weekend elections allayed concerns about the new prime minister's popularity.

The dollar index, which compares the US currency to six other currencies, was unchanged at 94.161, lingering near Friday's high of 94.302, a level not seen since Oct. 13.

The dollar strengthened by 0.16 percent to 114.205 yen, reaching a high of 114.315 yen. Above 114.41 would be the highest level since Oct. 20, when it reached 114.695, an almost four-year high.

In Sunday's legislative election, Prime Minister Fumio Kishida's ruling Liberal Democratic Party bucked forecasts and won a large majority, cementing his position in a turbulent party and allowing him to increase stimulus spending.

"The reduction in political uncertainty is playing out with slight yen weakness this morning," said Shinichiro Kadota, senior FX strategist at Barclays in Tokyo.

"The bigger driver of dollar-yen direction going ahead remains the Fed."