The euro hit new record highs versus the yen and Swiss franc on Wednesday supported by bullish expectations for euro area interest rates that raised the single currency's yield appeal.
The dollar also firmed against the yen but was little moved against the euro, having hit a one-week low on Tuesday after a report suggesting US inflation was well-contained, which backed the view that the Federal Reserve could cut interest rates this year.
The euro got a boost as market expectations for higher interest rates firmed in the eurozone after data showing the region's economy grew an above-forecast 3.1 percent in the first quarter from the same period last year. Data on Wednesday backed up the euro area outlook, showing eurozone inflation in April came in higher than initially estimated.
"Euro/yen has been one of the most highly correlated currency pairs with interest rate spreads in the last year - so it has benefited substantially from the attraction of high-yielding versus low yield," said Mitul Kotecha, head of global foreign exchange research at Calyon. "Even though the euro is not necessarily a high yielder the interest rate spread has been a major driver," he added.
At 1155 GMT, the euro was trading at 163.61 yen, having hit an all-time high of 163.87 earlier in the session. The euro also hit a record peak against the low-yielding Swiss franc at 1.6544 as investors' risk appetite remained robust and they looked to higher-yielding assets for returns.
The dollar was steady versus the euro at $1.3578 and was 0.2 percent firmer versus the yen at 120.49, below a three-month high of 120.58 yen struck the previous session.
The yen stayed on the backfoot against major currencies despite mounting expectations for the Bank of Japan to lift rates to 0.75 percent in the third quarter from the current 0.5 percent, with the yen's yield disadvantage seen staying large.
Further clues on monetary policy outlook could come from Japanese economic growth data for the first quarter on Thursday and a news conference by BOJ Governor Toshihiko Fukui after a policy board meeting ending the same day.
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