The dollar climbed 1% against a basket of currencies, and against the Japanese currency it rose above 123 yen.
Analysts cited last Friday's US inflation figures as having triggered the rise in the dollar.
Among stocks, the Dow Jones fell 113.98 points to 18,118.04, while the S&P 500 dropped 9.91 points to 2,116.15.
The Nasdaq index was 19.26 points lower at 5,070.10.
Shares in Time Warner Cable rose 5.2% to $180.01 after Charter Communications agreed to buy the company for $55.8bn. However, the share price remained below Charter's cash and stock offer of $195.71 a share.
Shares in Charter Communications rose 0.6% to $176.36.
The latest S&P/Case-Shiller housing survey showed house prices in 20 metropolitan areas were up 5% in March from a year earlier, the same rate as in February.
The biggest gains were seen in San Francisco, where they rose 10.3% over the year, and Denver, where prices climbed 10%.

But after losing their opening home fixture, 40 overs of play were possible before the weather closed in.
It was dominated by Tom Westley and Cook following the loss of Nick Browne.
Their unbroken stand of 128 in 37 overs, with the stylish Westley making an unbeaten 70, fully justified Essex's decision to bat first, reaching 144-1.
He was the more aggressive batsmen, reaching his half century off 64 balls to brighten a gloomy, drizzly day.
It was the sixth successive first-class match in which he has passed 50, starting with his appearance for the MCC in Abu Dhabi against county champions Yorkshire in March.
England Test captain Cook, who has already scored two centuries this season against Gloucestershire and Sussex, hit seven fours and a six off England team-mate Moeen Ali as he completed a more sedate fifty off 112 balls.
Rain and bad light meant the loss of the entire afternoon session following a morning session in which Worcestershire's New Zealand international fast bowler Matt Henry went for 11 off his first over before quickly claiming the only wicket to fall when he had Browne caught behind.
Worcestershire assistant coach Matt Mason told BBC Hereford & Worcester:
"It was a frustrating day to watch as a coach because I know anything we do isn't through lack of effort.
"But we didn't quite have our discipline with us this morning and probably over-pitched and were a little bit on the full side with deliveries at times.
"Credit to them in some ways in trying to get those wickets early but they just didn't quite get it right and it cost us momentum really."
Essex head coach Chris Silverwood:
"We were delighted to win the toss. We got off to a good start. It is essential if you want to capitalise when you have won the toss.
"We have got ourselves in a reasonable position. I won't count any chickens yet. There is still along way to go.
"But hopefully we can restart tomorrow morning and build on the start the guys at the top of the order have given us and see where that takes us."
(Open): Stocks opened lower on Wall Street while the dollar rose, with the US currency hitting a near eight-year high against the yen.
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England captain Alastair Cook continued his fine start to the season with an unbeaten 53 on another rain-hit day at New Road against Worcestershire.