The euro rose to a two-month high against the dollar in London Wednesday, as concerns receded over the bloc's sovereign-debt crisis.
The single currency rose to its highest level against the dollar at $1.3723 U.S. in early trading, though it dipped briefly after a German bond auction generated weak demand and data showed that European banks increased their borrowings from the European Central Bank.
The dollar moved lower against both the yen and the euro after U.S. President Barack Obama in his State of the Union address Tuesday called for a five-year spending freeze in federal expenditures.
Investors are awaiting the Federal Open Market Committee's rate decision at 2:15 a.m. EST for guidance on the timing of the bank's exit strategy from its bond-purchasing program.
Sterling rose against the dollar after the Bank of England's Monetary Policy Committee minutes for January showed that new member Martin Weale joined Andrew Sentance in voting for a 25-basis-point rate increase. Adam Posen again voted for an £250-billion extension of the bond-buying program.
The Swedish krona rallied against the euro after Swedish trade balance numbers printed an above-consensus surplus at 10.9 billion kronor and after the Swedish central bank's governor suggested in an interview with Dow Jones Newswires that the Riksbank won't fight krona appreciation.
The Norwegian central bank's rate-setting decision is due at 8:00 a.m., and market watchers expect the bank to leave base rate at 2%.
The euro was recently trading at $1.3692 U.S. against the dollar, up from $1.3682 U.S. late Tuesday in New York. The dollar was at 82.22 yen, compared with 82.25, while the euro was little changed at 112.59 yen. The pound was trading at $1.5860 against the dollar, up from $1.5820.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 77.844, down from 77.912 late Tuesday in New York.
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