The currency traded near a two-week high versus the yen after Fed Chairman Ben S. Bernanke said he may extend an emergency-loan program for securities firms into next year. The British pound may decline as an industry report showed U.K. consumer confidence slid to the lowest level since at least 2004 in June.
The dollar traded at $1.5663 at 11:33 a.m. in Tokyo from $1.5670 in New York yesterday. The currency reached $1.5611 on July 7, the highest level since June 25. It traded at 107.46 yen from 107.50 yen yesterday. It touched 107.75 on July 7, the strongest level since June 26. The euro was at 168.27 yen from 168.45 yen.
The U.S. currency may rise to $1.5610 per euro and 107.75 a dollar today, Kato forecast.
The dollar climbed 0.4 percent against the euro yesterday after Bernanke said in a speech in Arlington, Virginia, that the Fed is committed to financial stability and may extend the duration of funding to dealers obliged to bid at U.S. government debt auctions.
The Fed's Primary Dealer Credit Facility, which provides direct loans, and the Term Securities Lending Facility, which auctions as much as $200 billion in Treasuries, were created in March in response to the credit crisis.
The dollar has fallen 11 percent against the euro since September, when the Fed made the first of seven reductions in the target lending rate, now 2 percent, to prevent a housing slump from plunging the U.S. economy into a recession.
The Dollar Index traded on ICE futures in New York, which tracks the greenback against the currencies of six U.S. trading partners, was at 72.982 from 73.012 yesterday, when it reached the highest level since June 24.
Crude oil for August delivery traded at $136.16 a barrel after tumbling 3.8 percent yesterday, extending its decline from a record high of $145.85 on July 3. The euro-dollar exchange rate and oil have moved in the same direction 90 percent of the time during the past year, according to Bloomberg calculations based on the correlation of their value changes.