The USD may further extend its gains against the EUR today; on speculation that growing evidence of a global slowdown will increase the appeal of the U.S currency to traders as a safe-haven. The Dollar closed at $1.2889 per EUR from $1.3120, rising over 230 pips, the biggest gain in three weeks. The Dollar was broadly supported on Thursday as risk aversion came to the fore and optimism rose over the latest U.S. monetary and fiscal stimulus measures, which pushed the U.S currency higher.

The greenback also advanced after the Federal Reserve made its announcement about buying Treasuries to help boost the U.S economy. On Wednesday the Fed kept Interest Rates near zero as widely expected, and said it was prepared to buy long-term Treasury debt if that would help improve credit conditions. Moreover, a separate report revealed sales of new U.S. homes plunged 14.2% last month to a record low, further dulling the appeal of higher-risk currencies and assets such as stocks and boosting safe-haven flows into the Dollar. Apparently, bleak U.S. economic data and falling share prices kept investors wary of risk, even as countries embraced further monetary and fiscal stimulus to boost their economic growth.

Against the JPY however, the dollar was down 0.7% at 89.73 Yen yesterday. The greenback’s decline came as a result of the Federal Reserve unwillingness to provide more information about buying Treasuries, fueling speculation investors will favor Japan’s currency over the USD. The Dollar and Yen have been viewed as safe-haven currencies amid the global financial crisis, and both of these currencies often fluctuate depending on perceived shifts in investors’ tolerance for risk.