The currency also rose against the Australian dollar as U.S. Democrats increased their majority in Congress. The euro dropped versus the yen after European Central Bank member Juergen Stark signaled support for interest-rate cuts to bolster the region's shrinking economy. The 15-nation currency also dropped as regional stocks fell.
The dollar rose 0.5 percent to $1.2914 per euro at 7:53 a.m. in New York, from $1.2981 yesterday, when the U.S. currency fell 2.7 percent. The U.S. currency dropped 0.8 percent to 98.89 yen from 99.70. The euro fell 1.3 percent to 127.75 yen from 129.47. The dollar may strengthen to $1.25 in three months and $1.05 by June, Klawitter forecast. The dollar advanced 0.6 percent to 69.46 U.S. cents per Australian dollar.
The yen also rose as stock-market losses in Europe made it less attractive to buy overseas assets using funds from Japan. The Dow Jones Stoxx 600 Index lost 1.9 percent and U.S. stock futures declined. Yesterday, U.S. shares posted their biggest presidential election-day rally in 24 years.