Investing.com - The dollar and the euro moved higher against the yen on Tuesday, boosted by diverging outlooks for economic growth and tighter monetary policy.
The euro climbed against the yen, with EUR/JPY at 123.95, not far from the one-year peaks of 124.61 set on Monday in the aftermath of Emmanuel Macron’s convincing win in the French presidential election.
The victory for Macron signaled that political risks in France and across Europe are receding, in the wake of the populist surge which resulted in Brexit and propelled Donald Trump to the White House.
Demand for the single currency continued to be underpinned by indications of an improving economic outlook in Europe and as worries over political risk faded.
Recent economic reports have indicated that the economic recovery in the euro area is gathering momentum, which is expected to give the European Central Bank more room to tighten monetary policy before the end of the year.
ECB board member Yves Mersch said on Monday that the central bank will soon be able to adopt a more optimistic tone on the euro-area economy, a possible first step in winding down stimulus.
The euro was at seven-month highs against the traditional safe haven Swiss franc, with EUR/CHF at 1.0924.
The dollar hit fresh seven-week highs against the yen, with USD/JPY rising 0.42% to 113.71 amid expectations for Federal Reserve rate hike in June.
Markets are pricing in around an 82% chance of a hike at the Fed's June meeting, according to Investing.com’s Fed Rate Monitor Tool.
The euro was lower against the dollar as investors took profits after its recent rally.
EUR/USD was down 0.27% at 1.0894 after hitting 1.1021 on Monday, the highest level since early November.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.25% at 99.28.
Sterling was a touch lower, with GBP/USD dipping to 1.2927.
Meanwhile, the Australian dollar slumped to four-month lows pressured lower by disappointing domestic retail sales data and recent weakness in commodity prices.
AUD/USD touched lows of 0.7336 and was last at 0.7344, off 0.56% for the day.