London--Jan. 26--The dollar reversed course during the European session Friday. Dollar weakness after Federal Reserve chairman Alan Greenspan's Senate testimony Thursday was reversed by above-forecast U.S. durable goods orders data and statements from senior euro-zone officials suggesting the European Central Bank (ECB) would need to factor in the U.S.' emergency interest rate cuts when it meets next week. However, other euro-zone officials, speaking at the Davos summit, emphasized that the ECB acted independently of the Federal Reserve. Sterling gained strength on a Financial Times report suggesting U.K. Chancellor Brown might add to the "5 economic tests" which need to be met if the U.K. is to hold a referendum on European Monetary Union (EMU) entry. At 1555 GMT, the euro was bid at 0.9210 U.S. dollars from 0.9225 at the European open, at 107.90 yen from 107.85, at 0.6315 sterling from 0.6325 and at 1.5275 Swiss francs from 1.5240. The U.S. dollar was bid at 117.05 yen from 116.80, at 1.6580 Swiss francs from 1.6510 and at 1.5060 Canadian dollars from 1.5070, while sterling was bid at 1.4585 U.S. dollars from 1.4585, the Australian dollar at 0.5430 U.S. dollars from 0.5450 and the New Zealand dollar at 0.4350 U.S. dollars from 0.4350. The dollar started the day on a determinedly downward path, undermined by Greenspan's responses to Senators' questions Thursday in which he said the U.S. had experienced a "dramatic" slowdown and that U.S. growth was now "very close to zero." After trading in extremely narrow ranges in the Asian session because of the Chinese New Year holidays, European traders started to sell the dollar from the off. The euro/dollar pair pushed to a two-day high of 0.9317, while the dollar/Swiss franc pair hit a two-day low of 1.6395 by mid-morning. The dollar/yen pair dipped back to a low of 116.33, while the U.S. dollar/Canadian dollar pair dropped to a three-day low around 1.5005. However, sentiment toward the euro was undermined by a range of comments from senior euro-zone officials at the World Economic Forum in Davos and a Wall Street Journal Europe (AWSE) interview with U.S. Treasury Secretary O'Neill. Most damaging for the euro was Bundesbank president and ECB council member Ernst Welteke, who said that while the bank was currently on hold, that might change and that the bank would need to mull an interest rate move if the Federal Reserve cuts another 50 basis points off U.S. interest rates. However, ECB chief economist Otmar Issing said the bank made policy for Europe independently of the U.S. Federal Reserve. Issing said the bank's standard view of its role was that it believed the euro's performance was based on price stability and that the bank's policy was focused on the medium term. In the dollar's favor, newly appointed U.S Treasury Secretary Paul O'Neill, in an interview in Friday's WSJE, said that in order to speed the economic impact of President Bush's proposed tax cuts, the administration would immediately reduce the amount of money removed from American paychecks. The euro began to move lower and above-forecast U.S. durable goods orders data released later in the session cemented the trend as the dollar's budding recovery was boosted further. U.S. durable goods orders were boosted by aircraft orders and rose an above-forecast 2.2% on the month in December, against forecasts of a 1.2% month-on-month fall. The euro/dollar pair dropped back to an intraday low of 0.9196, while dollar/Swiss franc bounced to mark out a high for the day at 1.6605 toward the close. The dollar/yen pair pushed to a high of 117.35, while the U.S. dollar/Canadian dollar pair bounced back to the 1.5070 region. On the crosses, the euro/yen cross came under heavy selling pressure from a U.S. bank and fell to an intraday low of 107.30, adding to euro/dollar's woes. The euro/Swiss franc cross bounced to a two-day high of 1.5321 on the news that France's Axa sold 2.7 million shares in Switzerland's Credit Suisse for 584.1 million euros. Switzerland's KOF Institute's monthly index of the Swiss economy, which forecasts developments in six to nine months' time, fell to 0.86 in December. November's initially reported 1.01 reading was also revised down to 0.94. KOF said "the forward looking nature of the index should result in the 2000 slowdown in GDP being continued in the coming months." However, the report had little impact. Elsewhere in the euro-zone, Germany's Handelsblatt newspaper reported Friday that the federal government would retain a forecast of 2.75% gross domestic product growth for 2001, despite a request by Finance Minister Hans Eichel to cut the forecast to 2.6%. Germany's Bundestag sent the governing coalition's pension reform plans to the upper house, although expectations are that it will be rejected, at least in part. Euro-zone economic data had little impact. Euro-zone three-month M3 grew 5.0% on the year in December, slightly above forecasts, and well above the ECB's 4.5% reference level. Italian retail sales rose a well-below forecast 1.5% on the year in November. Italian statistics agency ISTAT said retail sales should grow a "more or less" real 1.5% in 2001. The Dutch business confidence index stood at +3.8 in December, down from +6.1 in November, and well below the +4 to +5.7 reading forecast in a BridgeNews poll of analysts. Dutch capacity utilization edged up to a 84.8% rate in December, from November's 84.7%. In a radio interview, Greek Finance Minister Yannos Papantoniou hinted that his departure from the ministry remained an open issue. Speculation has been rife for some time now that Papantoniou had asked for a different portfolio after Greece's accession to EMU in June. Sterling took advantage of dollar strength in the morning, cable pushing to a two-day high around 1.4690, before dropping back to the 1.4555 area as the dollar recovered in the afternoon. The euro/sterling cross traded a narrow range before dropping to the 0.6305 area as the euro softened in the afternoon. U.K. preliminary gross domestic product data had little impact, despite showing a below-forecast 0.3% on the month and 2.4% year-on-year rises in the fourth quarter of 2000. The Office of National Statistics said the slowdown was "broadly based." The data will increase expectations of a cut to the 6.0% repo rate at the Monetary Policy Committee meeting in February.