Euro slips from recent peaks before ECB, yen off lows

The euro slipped from an 11-month high against the yen and 14-month peak versus the dollar as investors focused on how much room the European Central Bank has for raising interest rates beyond a widely expected tightening later in the day.

 The yen held above a six-month trough against the dollar. The Bank of Japan met market expectations that it would keep monetary policy steady and signal its readiness to ease policy further, bucking a global trend of central banks withdrawing excess liquidity put in place during the financial crisis

 The ECB is set to raise its benchmark rate by 25 basis points for the first time since July 2008. Portugal's request for a European bailout has not changed the view the ECB would follow up with more interest rate hikes, but many believe the euro has risen too fast too far and is overdue a correction.

 Analysts also say ECB President Jean-Claude Trichet must sound hawkish enough to keep alive expectations for around 100 basis points in rate hikes by November and for the euro to achieve fresh gains. more