The yen and the Swiss franc strengthened as concern over a U.S. economic slowdown, tumbling stock markets and the euro region’s debt crisis spurred demand for the currencies as a refuge.
The dollar fell against the euro and the yen on speculation the Federal Open Market Committee will repeat its pledge to maintain stimulus measures to revive the economy. The franc reached records versus the euro and the dollar. The benchmark Stoxx Europe 600 Index rose, after falling earlier for the eighth consecutive day.
“Investor sentiment is very fragile, boosting demand for the safest currencies, such as the yen and franc,” said Lee Hardman, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “There’s a strong focus on today’s FOMC meeting. The market is looking for another shot in the arm from more quantitative easing. Investors are hesitant to buy the dollar given the risk of more quantitative easing.”
The Japanese currency has almost erased its decline since the nation’s unilateral intervention in the foreign-exchange market pushed it to as weak as 80.24 per dollar on Aug. 4. That same day, The Bank of Japan added 10 trillion yen of stimulus. BOJ Governor Masaaki Shirakawa today said volatile exchange rates could have a “negative impact” on the economy.
The Federal Reserve meets today on monetary policy and may prolong a pledge to maintain record stimulus, economists at JPMorgan Chase & Co., BNP Paribas SA and Goldman Sachs Group Inc. said. The Fed could commit to hold its $2.87 trillion balance sheet steady for an “extended period,” they said.
Fed policy makers are likely to embark on a third round of large-scale asset purchases, moving “more decisively” to secure the U.S. recovery, Harvard University economist Kenneth Rogoff said.

Federal Reserve policymakers face enormous challenges and pressures  ahead of the 1815GMT announcement today.