NEW YORK: The dollar hit a three-week high against the euro and a two-month peak versus the yen on Wednesday, extending a rebound rally underpinned by European Central Bank plans to frontload its quantitative easing program in a move to keep interest rates low.
"The ECB has taken the wind out of the euro's sails," said Mark McCormick, currency strategist at Credit Agricole in New York.
McCormick added the ECB's plans have helped focus the market on consolidating the euro's recent rally, especially as it approached $1.15 again.
"Today we're seeing more momentum behind that and I think the market is really focused on the FOMC minutes," he said, referring to the U.S. Federal Reserves interest rate setting committee meeting minutes from April.
The Fed minutes are due at 1400 EDT/1800 GMT.
"Our economists think today's minutes will ... be consistent with their view that the Fed seems poised to begin tightening in September," said Adam Cole, Head of G10 FX Strategy at RBC in London.
"Despite the small back-up in U.S. yields this week, markets still only discount the first Fed hike around January 2016, so such a message should add to dollar gains."
In mid-morning New York trade, the euro bounced off its three week low of $1.10620 to trade off 0.37 percent at $1.11090, on the EBS trading platform.
The dollar held near the two-month peak of 121.27 yen, up 0.48 percent.
Some analysts pointed to headlines about Greece as weakening the euro, but most said the biggest element was the sense that the past month's 8 percent pullback has cleaned out many long-term bets on the dollar, leaving room for new action.
"Positions are a lot cleaner and that may well have opened the way to another push higher," said Josh O'Byrne, a strategist with Citi in London.
"If this is the beginning of a dollar resurgence, then the Canadian dollar, Norwegian crown and rouble are interesting bets on the downside," O'Byrne said.
Sterling resisted the charge, gaining 0.3 percent to $1.5555 on the back of some new signs of unease over ultra-low rates and the housing market from the Bank of England.
Separately, five of the world's largest banks on Wednesday were fined roughly $5.7 billion for manipulating financial markets. Four of them agreed to plead guilty to U.S. criminal charges over manipulation of foreign exchange rates while a fifth agreed to plead guilty to rigging benchmark interest rates.
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