The dollar rose against the yen and the euro Thursday as stronger U.S. retail sales numbers for November nudged forward market expectations for higher interest rates. The dollar climbed to 119.21 yen from 118.47 yen ahead of the data, rising for the first time after three days of profit-taking on bullish dollar bets. The greenback is up 1.2% for the session. Meanwhile, the euro slipped to $1.2387 from $1.2440 before the data, down 0.5% for the day.

The greenback’s gains return the U.S. currency to its upward trajectory against rivals. Investors in large numbers had been wagering on the dollar strengthening in the belief that an improving U.S. economy would move the Federal Reserve to raise interest rates before other central banks.

Over the past three sessions, though, investors had been exiting some of those bullish bets on the dollar and moving into haven assets such as the yen amid concerns that the drop in oil to its lowest price in more than five years would weigh on already low inflation in economies around the world.

The dollar gained Thursday after the Commerce Department said U.S. retail sales rose 0.7% in November from a month earlier, its largest increase in eight months. Removing autos, a volatile category, sales rose 0.5% last month.

Economists predicted overall sales would increase 0.4%, and those sales excluding autos to rise 0.1% in November.

The retail sales numbers, joining a robust November U.S. jobs report, should sit well with the Fed, said Steven Englander, head of developed-market currency strategy at Citigroup Inc.

The central bank’s policy-making committee may decide to shift to a more hawkish tone when it meets next week, as it considers when to raise interest rates. Higher interest rates make the dollar more attractive to investors, as they increase returns on assets denominated in the currency.

“Payrolls and retail sales are significantly stronger than expected with significantly stronger revisions,” Mr. Englander said. “The Fed will see that oil price declines are positive for the U.S. economy and that the U.S. economy has a head of steam to it.”

U.S. oil prices are down about 38% this year, with the slide accelerating since the start of October.

The Fed is considering the pace and timing of when it will tighten monetary policy, as the Bank of Japan and the European Central Bank have been taking steps to stimulate their economies and ward off deflation that ultimately have weakened their respective currencies.

Both the ECB and the BOJ continue to receive signals they will have to do more. Earlier Thursday, October machine orders in Japan showed the lingering effects of April’s sales tax increase, while bank takeups of loans from the ECB lending program were modest, adding pressure on the central bank to take further action.