The dollar extended its gains from the previous day on Thursday as sovereign Asian players bought it back after the Federal Reserve confirmed it was ceasing its $600 billion bond-buying programme at the end of June and gave no hint of further economic stimulus.
Sterling slumped to three-month lows against the greenback after the Bank of England raised the prospect of offering more stimulus, in contrast to the Fed. The dollar index, which tracks the US currency's moves against six major currencies, hovered above the Ichimoku cloud and investors said it could approach resistance at its 100-day moving average at 75.63 in coming weeks.
The closely watched 10-year Treasury yield was still below the crucial 3 percent line, although it rose 2/32 in price to yield about 2.973 percent, staying almost unchanged from 2.974 percent in late US trade on Wednesday. The dollar index has lost more than 15 percent in the last year as dollar interest rates hovered at record lows and as some investors saw the greenback as an attractive funding currency.
Other market players said they were now eyeing a June 16 high, with many suggesting that if the dollar could decisively break above the 76.02 hit that day, it may post further gains in coming months. The dollar last traded at 80.45 yen, pulling up from Wednesday's trough around 79.98, having hit the session's peak of 80.65 after triggering stop losses around 80.50 and as importers chased it higher at the local fixing. Some traders cited Asian sovereign players scooping up the dollar across the board, while a US bank was seen buying USD/JPY, with a dollar offer by a major Japanese bank capping gains.
The dollar also firmed against the euro, which fell 0.4 percent to $1.4305, well off Wednesday's high near $1.4441. Immediate support is seen around $1.4300, a 38.2 percent retracement of the June 16-22 rise. The outlook for the single currency remains tied to developments in Greece, with markets now squarely focused on a meeting of European leaders on Thursday and Friday.
The dollar also strengthened against commodity currencies like the Australian dollar. The Aussie dipped to $1.0553, down about a cent from Wednesday's high. The very idea of the BoE printing more money saw sterling promptly fall to $1.6050, lows not seen since April 1. It later lost more ground, falling to as low as 1.6017. It also declined against the euro, which at one point rose to a two-week high of 89.53 pence, on track to test its June 8 high of 89.76 pence.