LONDON (AFX) - The euro climbed higher against the dollar in midday trade on expectations of further soft economic news from the U.S., dealers said.
Dealers predicted the euro would hold onto its gains for longer than it had tended to recently.
"A lot of these recent rallies of the euro have been very shortlived. It's tended to rise in the morning but then give up its gains in the afternoon but people have become quite confident that it will stay relatively firm," Standard & Poor's MMS currency analyst Russell Bloom said.
But dealers were wary about the euro's prospects longer term. "The market has positioned itself on problems in the U.S. but I think that's as far as it goes, and nobody's getting carried away about it at the moment," Bloom said. Dealers said the market had invested Federal Reserve chairman Alan Greenspan's congressional testimony yesterday and was braced for further negative data from the U.S., particularly the National Association of Purchasing Managers index due at 3.00 pm. Noting expectations that the European Central Bank will yet again hold rates steady today, dealers said the market was unlikely to react at the announcement due at 12.24 pm.