LONDON (AFX) - The dollar slipped lower in midday London trade, with the focus of attention remaining on stock markets ahead of Wall Street's opening, dealers said. "The dollar has weakened a bit further versus the euro since this morning, the trend is still intact," said Jane Foley, strategist at Barclays Capital. Sentiment is very much against the dollar and the economic fundamentals are not playing a huge deal in the equation, she added. Foley believes the reason sentiment has turned against the dollar is that investors are turning to higher yielding countries, such as Korea, Poland, South Africa, Australia and Canada. "Fund managers and investors are looking for higher yields elsewhere. Because the US has such a large current account deficit, if we don't have the same amount of flows going into the US every day then the dollar does respond," she said, adding "that has spurred people to look elsewhere." The strategist said Wednesday's testimony, could be crucial as it will give US Secretary O'Neill the opportunity to defend the US administration strong dollar policy. The big question is how far can it extend, does it mark the beginning of a long term recovery for the euro or is it something which will just persist for the next few weeks? she asked. The euro managed to break above the 0.90 usd level, for the first time since the "notes and coins"-led spike that came to an abrupt end on January 4, noted Adrian Schmidt, economist at the Royal Bank of Scotland. But Schmidt believes that, technically, euro/dollar will look vulnerable to a push back down to 0.8960 today. "Fundamentally the euro may struggle to make headway today with concern over the German IG Metall wage dispute spreading to other euro states," he said. Foley also underscored the absence of any particularly supportive euro news, adding that inflation and wage data are actually pointing upwards. "The Italian wage number is actually a deconstructive piece of data for the euro," she said. In March hourly wages in Italy rose 0.5 pct from February and were up 3.2 pct year-on-year. Meanwhile, sterling weakened somewhat against the euro but remained well confined to its tight range. "As long as euro/sterling fairly steady then sterling/dollar remains driven by euro/dollar," noted Foley. But the strategist expects some selling interest to hit sterling's market at current rising level.