TOKYO, Apr 19 (Reuters) The dollar hit a seven-month low against the euro on Wednesday, extending losses made after minutes of the Federal Reserve's March meeting suggested the central bank was close to ending a two-year run of raising interest rates.
Amid a broad sell-off, the dollar also slipped to a fresh three-month trough versus the Swiss franc, stung by a bevy of disappointing news on Tuesday that included the minutes and softer-than-expected data for U.S. producer prices and housing starts.
''The immediate trigger was the Fed's minutes, but sentiment has already been bearish for the dollar in recent weeks,'' said Tatsuro Karitani, senior trader at Mizuho Corporate Bank, who also cited concerns about tension over Iran's nuclear ambitions.
The minutes from the March 27-28 policy meeting said: ''Most members thought that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy.'' At the meeting, the first under new Chairman Ben Bernanke, the Fed raised the overnight rate to 4.75 percent, its 15th straight quarter percentage point increase since June 2004.
The market still expects another rise at the next meeting in May, but the minutes reduced the prospects for a further tightening beyond that, traders said.
Helping to cement such expectations, San Francisco Fed President Janet Yellen said on Tuesday that the Fed was ''highly alert'' to the possibility of too much monetary tightening.
In early Tokyo trade, the dollar bought 116.80 yen, down from around 117.05 yen in late New York trade and off nearly a full yen from the late levels in Tokyo on Tuesday.
If regular dollar buyers, such as Japanese importers and institutional investors, shy away from buying at the current levels, the market could break below technical support at 116.50 yen.
''Given the dollar's broad weakness against European currencies, dollar selling will gain momentum to test key support levels if its rebound against the yen is limited,'' said Karitani at Mizuho.
The euro was at $1.2365, just off the fresh seven-month high of $1.2368 hit earlier in the session.
The single European currency was slightly down at 144.45 yen but in sight of the record high of 144.88 yen hit earlier this month.
The dollar was at 1.2685 Swiss francs after having slipped to around 1.2665, a three-month low.
For more clues about the the direction of Fed rates, the market was looking to U.S. consumer prices data for March due later in the session.
REUTERS SC PM064