Dollar hits eight-month highs against the Euro

The U.S. dollar extended its gains against the Euro and rose to eight-month highs on Wednesday as worries over more sanctions on Russia and their impact on Eurozone growth pulled the single currency down.

However, the dollar could only post modest gains, however, as attempts to push the euro below a key technical level at $1.3450 failed. The Euro last fetched 1.34625 dollars, after having earlier hit 1.34544, the lowest since November.

Dollar gains were more subdued on Wednesday with no major economic releases before a number of highly rated economic data and before the Federal Reserve’s meeting next week.

Further escalation of tensions between Russia and Ukraine could weigh further on the euro if more trade sanctions are enforced on Russia.

The European Union (EU) on Tuesday threatened Russia with additional penalties over Ukraine following the downing of a Malaysian airliner last week. Foreign ministers for the first time raised the possibility of restricting Russia`s access to European capital markets.

The next U.S. focus, meanwhile, will be next week`s Fed meeting, where investors will be watching to see if a recent spate of stronger employment and inflation data shifts the economic outlook of central bank members.

The U.S. dollar meanwhile advanced 0.17 percent against the British pound to $1.7034, after Bank of England minutes failed to boost expectations of an interest rate hike by year-end.

The BOE’s Monetary Policy Committee said all nine members were in favor of making no changes to its record-low interest rate and keeping its quantitative-easing program at £375 billion ($640 billion).

The Australian dollar was the largest mover of the major currencies, advanced to $0.94554, the highest since July 2 after a higher-than-expected reading of a key gauge of underlying inflation in June in Australia dented market speculation of future rate cuts.

The dollar index, which tracks the greenback against a basket of six major currencies, was steady on the day at 80.87.