Dollar hits 8-year high vs yen, euro firms

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The dollar rose against most major currencies on Wednesday, hitting an eight-year peak against the yen on expectations the Federal Reserve would raise interest rates later this year due to signs the U.S. economy is recovering from an anemic first quarter.

The euro recovered from a one-month low versus the greenback following reports of progress between Greece and creditors toward a deal that would unlock cash for the debt-laden nation to avert default.

The dollar's gains were also fed by automatic sell orders for the yen which had traded in a relatively tight range versus the greenback, traders said.

"We broke out of a technical pattern because of the general dollar strength," Marc Chandler, chief global currency strategist at Brown Brothers Harriman & Co. in New York, said of the Japanese currency.

Japanese Economics Minister Akira Amari said earlier Wednesday while recent movements reflected the dollar's gain rather than the yen's fall, excessive currency moves were undesirable, echoing earlier signals from the finance ministry and Bank of Japan.

Dollar wrecking ball
Dollar wrecking ball

Traders brushed off Amari's comments with the dollar touching a multi-year high of 124.07 yen on the EBS trading system. It last traded up 0.71 percent at 123.86 yen.

The euro's bounce against the dollar was modest, however, as European officials downplayed a Greek debt accord was near.

"All those comments have to be taken with a big pinch of salt, but it's helping there are signs we are moving toward a deal," said Charles St. Arnaud, currency strategist at Nomura Securities International in New York.

The euro fell earlier on revived view that the U.S. currency would push toward parity with the European Central Bank's plan to accelerate its bond purchases for its 1.1 trillion euro quantitative easing program.

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The euro was last up 0.08 percent at $1.08905 after touching one-month low of $1.0819 earlier on the EBS platform.

Renewed enthusiasm in the greenback boosted the dollar index to its highest in more than a month at 97.775. It was last up 0.08 percent at 97.37.

Tuesday's better-than-expected U.S. data on core business spending, new home sales and consumer confidence failed to renew bets the Fed would end its near zero rate policy at its June meeting, but they supported the notion it would do so by year-end, analysts said.