LONDON: The euro rose for a second day against the dollar on Tuesday before a meeting of the U.S. Federal Reserve that may push back expectations for when U.S. interest rates will start to rise.
The Swiss franc fell after the Swiss National Bank said it was ready to intervene in the market to curb gains by the currency since it lifted its cap on the franc's value. The franc lost 2 percent against the euro to trade as low as 1.03845.
The euro rose as much as 0.9 percent to trade at $1.13455 , lifting it further from an 11-year trough of $1.1098 reached on Monday, when it became clear that Greece had voted in a new anti-bailout government.
Investors are hopeful that the left-wing Syriza party leader, Alexis Tsipras, is willing to negotiate, easing concern that a confrontation with its international creditors could lead Greece to leave the euro.
The dollar edged down across the board before a two-day Fed policy meeting that starts later on Tuesday. Investors were betting the Fed would respond to a recent string of rate cuts and easing measures by other major central banks by pushing back expectations of when U.S. rates will rise.
"In the next 24-48 hours it's really about whether the Fed stages a bit of a fight-back or not," said Adam Myers, European head of European FX strategy at Credit Agricole in London.
"If they stay silent, the market will think ... that's a green light (for U.S rate rises) so let's sell euro/dollar," he said, and the euro could break through $1.15 this week.
The euro had dropped by about five U.S. cents after the European Central Bank announced last Thursday it would begin quantitative easing, so it was not surprising to see some short-covering in the euro, said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
Market participants are now probably looking for opportunities to put such euro bearish bets back on, he said.
"If the euro rises further, I think there will be lots of people who will look for opportunities to sell into the rally," Murata said, adding that the ECB's bond-buying programme is likely to weigh on the euro going forward.
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