- The dollar was higher against the yen on Tuesday after the Bank of Japan extended a bank lending scheme to boost the effectiveness of its monetary stimulus program, while the euro moved higher, shrugging off an unexpected deterioration in German economic sentiment this month.

USD/JPY hit 102.75, the highest since January 31 and was last up 0.60% to 102.53.

The drop in the yen came after the BoJ decided to double part of a growth lending program at its monthly policy meeting, and said individual banks could borrow twice as much as previously under a second facility.

Policymakers voted to leave the bank’s main policy target unchanged. The bank also maintained its upbeat economic assessment, indicating that there will be no further monetary easing in the coming months.

EUR/USD hit 1.3735, the strongest since January 24 and was last up 0.16% to 1.3728.

The common currency shrugged off a report showing that the closely watched ZEW index of German economic sentiment deteriorated unexpectedly in February, amid concerns over the outlook for the U.S. economic recovery and fears over turbulence in emerging markets.

The ZEW Centre for Economic Research said that its index of German economic sentiment came in at 55.7 this month, down from 61.7 in January. Analysts had expected an unchanged reading.

However, the current conditions index improved to two-and-a-half year highs of 50.0 this month from 41.2 in January, beating expectations for an increase to 44.0.

Elsewhere, GBP/USD was down 0.24% to 1.6672 after data showed that consumer price inflation in the U.K. fell below the Bank of England’s 2% target for the first time since November 2009 in January.

The Office for National Statistics said consumer price inflation accelerated at a rate of 1.9% last month, down from 2.0% in December. Analysts had expected consumer price inflation to remain unchanged last month.

Consumer prices fell 0.6% in January from a month earlier, compared to expectations for a decline of 0.5%.

The dollar slid against the Swiss franc, with USD/CHF losing 0.10% to trade at 0.8905.

The Australian dollar slipped lower, with AUD/USD dipping 0.09% to 0.9024.

The pair rose to one-month highs of 0.9081 earlier after the minutes of the Reserve Bank’s February meeting said a period of steady interest rates is most likely as record-low borrowing costs and a weaker currency support growth.

Meanwhile, NZD/USD was down 0.66% to 0.8313.

The U.S. dollar was little changed against the Canadian dollar, with USD/CAD inching up 0.02% to 1.0965.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat for the day at 80.20.

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