The euro edged up in early Thursday trade in Asia, extending its recovery from a seven-week low as commodity prices steadied after weeks of falls, though it is still seen vulnerable due to uncertainty over the Greek debt crisis. The dollar rose to a three-week high against the yen on rebounds in US bond yields following the release of minutes of the Federal Reserve's April meeting that raised speculation a rate hike could come sooner then previously thought.
The euro stood at $1.4260, up 0.1 percent on the day and clutching a 23.6 percent retracement - at around $1.4260 - of its decline earlier this month, having extended its recovery from Monday's seven-week low of $1.4048. Resistance is seen at the 55-day moving average of $1.4296, which may be hard to break given uncertainty over how to pull Greece out of its crisis.
But the euro's rebound even after Eurozone finance ministers floated the idea of a "soft" restructuring of Greek debt on Tuesday led many traders to think the issue may have become stale in the market for the near term. Against the yen, the euro rose to 116.70 yen, its highest level in a week, with an immediate target seen at 116.91, a 38.2 percent retracement of its one-month decline until last week.
Speculation that there could be more M&A-related yen-selling flows also marginally hurt the yen against European currencies after reports that two Japanese companies plan to buy Swiss firms. The yen showed no reaction to news that Japan's GDP fell more than forecast in the first quarter. The dollar also hit a three-week high vs the yen around 81.81, with the yen hurt by a sharper risk appetite and rising US Treasury yields.
FOMC minutes showed some Fed officials saw a rise in inflation risks and that most officials prefer to raise rock-bottom interest rates before selling assets when the time comes to tighten policy, lifting US bond yields. Sterling stood near six-week low against the dollar after a mixed UK employment report and a slightly dovish tone to Bank of England policy minutes painted a clouded outlook.
The minutes of the BoE's May meeting showed an unchanged 6-3 majority seeing no need for an increase in UK interest rates, but two of the hawks, Spencer Dale and Martin Weale, said their decisions were finely balanced. The pound traded at $1.6167, just above its 100-day moving average at $1.6143.