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The euro slipped from an 11-month high against the yen and 14-month peak versus the dollar as investors focused on how much room the European Central Bank has for raising interest rates beyond a widely expected tightening later in the day.
The Bank of Japan met market expectations that it would keep monetary policy steady and signal its readiness to ease policy further.
The ECB is set to raise its benchmark rate by 25 basis points for the first time since July 2008. Portugal's request for a European bailout has not changed the view the ECB would follow up with more interest rate hikes, but many believe the euro has risen too fast too far and is overdue a correction.
Analysts also say ECB President Jean-Claude Trichet must sound hawkish enough to keep alive expectations for around 100 basis points in rate hikes by November and for the euro to achieve fresh gains.
"The euro has rallied considerably on the ECB rate hike view but it may be the case of buy the rumour sell on the fact," said Koji Fukaya, chief FX strategist at Credit Suisse. "The euro zone debt crisis has not stopped the ECB from making hawkish comments. That means Portugal's story is not going to stop a rate hike. The market is pricing in 100 bps of rate hikes, but it may be difficult for us to really see that."
The Australian dollar scaled a fresh 29-year peak against the greenback of $1.0481 and rose to 89.45 yen , its highest since September 2008, after data showed the economy added a higher-than-expected 37,800 jobs in March.
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