The dollar accelerated to its strongest level in nearly six years against the yen on speculation the Federal Reserve will increase interest rates earlier than forecasted.
The greenback advanced 0.2 percent to trade at 106.20 yen as of 5 p.m. New York time and touched 106.47 yen, its highest level since Oct. 1, 2008. The euro rose 0.5 percent to 137.40 yen.
The euro accelerated after touching its weakest level against the U.S. currency since July 2013. The shared currency rose 0.3 percent to trade at $1.2937 after earlier declining to $1.2680. It touched $1.2788, its 38.2 percent Fibonacci retracement point of its advance versus the dollar from July 2012 to May 2014.
“Prices are nearing the longer-term solid horizontal support area 1.2815-1.2750,” Roelof-Jan Van den Akker, an Amsterdam-based senior analyst at ING Groep NV, told Bloomberg News. “This suggests limited downside potential, and we should be prepared for a sudden reversal pattern in ending the downtrend.”
The Fed, which is scheduled to meet on Sept. 16-17, is debating the pace of the first interest rate increases since 2006. The rate has hovered at a range of zero percent to 0.25 percent from 2008 in order to boost the economy. The Fed officials are also phasing out the monthly bond purchases in October.
Yields on U.S. Treasuries rose, making U.S. dollar assets look attractive. Yield on the 10-year Treasuries rose to 2.51 percent on Tuesday, the strongest level since Aug. 5. The 5-year yields touched a high of 1.77 percent, the strongest level since Aug. 1. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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