Speculation that both the Japanese and European central banks are about the raise interest rates for their respective currencies has strengthened both the yen and the euro.

This morning the US dollar was at 1.2740 to the euro, the yen was at 115.54 to the dollar and the euro stood at 1.4405 to the pound.

The European Central Bank (ECB) meets to discuss interest rates today and is expected to keep hold at 2.75 per cent, but many analysts feel the bank will raise rates faster than the US, attracting investors in the single currency.

Many expect eurozone interest rates to rise to 3.25 per cent by the end of the year.

"The euro will be well supported today by expectations of further ECB rate hikes this year,'' Masashi Kurabe of Bank of Tokyo-Mitsubishi UFJ, told Bloomberg.

The Bank of Japan is expected to raise rates from zero per cent for the first time in six years next week.