LONDON: The dollar rose against the euro and yen on Tuesday ahead of the US Federal Reserve s rate-setting meeting due to start later in the day, dealers said.
In early European trade, the euro fell to $1.5574 from 1.5662 in New York late on Monday.
Against the Japanese currency, the dollar climbed to 104.25 yen from 104.21.
Financial markets in Japan were closed for a public holiday and will reopen on Wednesday.
Analysts expect the Federal Reserve to lower its key interest rate by 25 basis points to 2 percent at the conclusion of a two-day meeting on Wednesday.
The dollar should remain supported ahead of tomorrow s rate decision, said Commerzbank economist Antje Praefcke.
There is still market speculation the Fed may signal a pause or even the end of the rate-cut cycle in the accompanying statement.
The dollar has declined sharply against the euro in recent months after the US central bank made a series of rate cuts that slashed three percentage points off its base rate since September in a bid to spur economic growth.The lower US rates have made the dollar less attractive to investors than the euro as the European Central Bank has kept its rates on hold at 4 percent while annual eurozone inflation climbed above 3 percent.
Rather than stating its intention to bring an end to the rate cuts, the (Fed) will likely communicate (in its statement Wednesday) a change of tack by making a reference to stabilizing market conditions, leading market participants to expect a reduction in the easing momentum, said Ashraf Laidi at CMC Markets.
Japan s central bank was meanwhile to hold a one-day monetary policy meeting on Wednesday, when it will also release its twice-yearly forecasts for economic growth and consumer prices. No BoJ move on rates is expected this week.
Elsewhere on Tuesday, the British pound steadied against major rivals ahead of next week s rate decision by the Bank of England.
In London on Tuesday, the euro changed hands at $1.5574 against 1.5662 late on Monday, at 162.38 yen (163.19), 0.7854 pounds (0.7860) and 1.6156 Swiss francs (1.6185).
The dollar stood at 104.25 yen (104.21) and 1.0375 Swiss francs (1.0333).
The pound was at $1.9834 (1.9920).
On the London Bullion Market, the price of gold fell to $887.15 per ounce from $890.50 late on Monday. -AFP
