Investing.com - The euro was at 12-year lows against the dollar on Wednesday, pressured lower by the diverging monetary policy stance between the Federal Reserve and the European Central Bank.
EUR/USD hit lows of 1.0666, the lowest level since April 2003 and was last at 1.0682.
The single currency had already weakened sharply against the dollar so far this year after the ECB unveiled a trillion-euro quantitative easing program in January. The euro resumed its sharp downward decline after the bank started asset purchases on Monday, pushing euro area bond yields to new lows.
German 10-year bunds fell to record lows on Tuesday, while the yield on Spanish and Italian bonds also hit their lowest levels on record. Yields fall as bond prices rise.
Demand for the dollar continued to be underpinned after last week’s stronger-than-forecast nonfarm payrolls report for February solidified expectations for higher interest rates.
The Fed is expected to begin raising interest rates around the middle of this year and investors were looking ahead to next week’s policy statement to see if it would drop its reference to being patient before raising rates.
USD/JPY was at 121.17, not far from Tuesday’s eight-year highs of 122.02.
The Bank of Japan expanded its stimulus program in late October amid concerns that falling oil prices could lower the inflation outlook.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, hit multi-year highs of 98.86 on Wednesday and was last at 98.63.
Elsewhere, the euro was steady near six-month lows against the yen, with EUR/JPY at 129.6 and was at more than seven-year lows against sterling, with EUR/GBP at 0.7086.