The yen hit a six-week high against the euro on Tuesday after a media report stoked expectations the Bank of Japan will raise interest rates as soon as July. But the yen pared those gains and slipped from near an eight-month peak versus the dollar as market players booked profits ahead of the U.S. Federal Reserve's policy meeting on Wednesday, traders said. The dollar has lost 6 percent against the yen and 4.5 percent versus the euro in three weeks on growing speculation that the Fed has nearly finished a two-year campaign of raising interest rates. "The market has started to get ready for the Fed meeting," said Hideki Hayashi, global strategist at Shinko Securities. "It is seeking currency levels where it will feel comfortable when the meeting takes place." The yen rose on a report by Jiji Press that the BOJ would upgrade its description of the economy, replacing the word "recovery" with "expansion" in its upcoming monthly assessment. Such a change -- the first since 1991 -- would suggest the central bank was closer to boosting rates for the first time in six years. Expectations for higher overnight rates in Japan, currently pinned near zero, were already bumped up by BOJ data on Monday that showed land prices in Japan rose in 2005 for the first time in 15 years, underscoring the economy's steady recovery from more than a decade of stagnation. "The market is clearly favouring the yen at the moment," said Kota Kimura, forex manager at Shinkin Central Bank. "It's not so easy to reverse that." By 0400 GMT, the euro was little changed on the day at 141.85 yen after falling as low as around 141.25 yen. The Japanese currency's initial strength versus the euro helped to lift the yen against the dollar. The dollar was up slightly at 111.75 yen after falling to around 111.25 yen -- near an eight-month low of 110.99 yen hit on electronic trading platform EBS on Monday. The euro dipped to $1.2700 from around $1.2710 in late U.S. trade the previous day, when it climbed to a one-year peak of $1.2788. Sterling dipped to $1.8565 pulling further away from a one-year high of $1.8690. As investors retreat to the sidelines ahead of the Fed meeting, speculative moves in thinning trade could cause some volatility, traders said.