The euro trimmed gains against the dollar today but stayed in sight of a two-month high on expectations that the European Central Bank (ECB) will keep raising interest rates.
Earlier this morning, the euro dipped to $1.2875 from around $1.2890 in late US trade. It rose as far as $1.2940 on electronic trading platform EBS yesterday, the highest since early June.
Against the yen, the euro hovered near its highest level since the single European currency was launched in 1999, on forecasts its yield advantage will widen.
The ECB is expected to tighten credit again after bumping rates up to 3 per cent earlier this month, while the Bank of Japan has said it will take its time hiking rates after lifting them to 0.25 per cent last month in its first rise in six years.
The Federal Reserve is widely expected to leave its key funds rate at 5.25 per cent in September.
The Fed kept rates unchanged at a policy meeting earlier this month due to cooling US economic growth after pushing them up 17 straight times since June 2004.
Robust economic growth figures released last week for the euro zone in the second quarter have helped to boost the euro against the dollar, which has been softened by tame inflation reports and weak housing data.
The euro was nearly flat at 149.40 yen, in sight of a record high of 149.75 yen touched on EBS yesterday.
Traders said it was just a matter of time before the euro pierces the psychological 150 yen level.
Profit taking in the euro against the dollar helped the US currency to climb to 116.10 yen from around 115.85 yen.