TOKYO: The dollar on Thursday edged closer to 120 yen after the Federal Reserve published an upbeat outlook on the US economy, while the euro was mixed ahead of a European Central Bank policy meeting.
In Tokyo the greenback fetched 119.92 yen, up from 119.80 yen in New York and a whisker off the 120 yen mark last reached in July 2007.
The euro hovered at a two-year low of $1.2307 against $1.2308, while it rose to 147.59 yen from 147.48 yen in US trading.
Dollar buying got a boost after the Fed report showed "a number" of the central bank's 12 districts said contacts "remained optimistic about the outlook for future economic activity".
The Beige Book, a collection of anecdotal information on current economic conditions, is closely watched by investors as a barometer of the health of the economy.
For the first time in more than a year, the Fed dropped its "modest" and "moderate" descriptions of overall growth, saying reports suggest "that national economic activity continued to expand" in the past two months.
The report came on the heels of healthy construction and sales figures that also bolstered hopes for the world's top economy.
Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan, said the dollar-yen rate -- under renewed pressure since the Bank of Japan launched fresh easing measures in late October -- has "upswing room to go up to 125 by the end of this year".
The euro is struggling to move higher ahead of Thursday's ECB meeting, with investors watching to see if policymakers introduce monetary easing measures to kickstart the region's sluggish economy.
Many analysts expect the central bank to hold fire, but say it may signal a move in the new year such as sovereign bond purchases.
"Even if it does not step up its actions just yet, it will choose language for the statement that makes additional easing a near certainty for the first quarter of 2015," said Berenberg Bank economist Christian Schulz.
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