TOKYO (AFX-ASIA) - The euro firmed late morning after the currency finally held above resistance at 95 cents overnight and is expected to maintain a firmer tone today amid demand from Japanese life insurers and other long-term funds, dealers said. "I heard from several areas that Japanese insurers are interested in euro assets," said Koji Fukaya, chief foreign exchange analyst at Bank of Tokyo-Mitsubishi. "This is not speculative, short-term investment but a long-term strategy," Fukaya said, noting that portfolio managers are shifting investment funds from the US and towards European assets. The euro/dollar now appears to be supported at levels around upper 94 cents. "In these past weeks the euro has been floating at upper 94 levels so it's difficult to fall through that now," Fukaya said. "The next few months should see a range of 95-98 cents." The fate of the euro remains tied to the outlook for the US stockmarket, with the dollar notably failing to capitalise on recent sharp but sporadic gains on Wall Street as investors worry the long-term trend remains weak. "It all depends on the US stockmarket. We cannot be sure of a recovery until after July. The US data, especially capex and the corporate side, is weak so it will take one or two months," Fukaya said. Meanwhile, US authorities seem comfortable with a gradual dollar depreciation, as long as it does not get out of control, despite regular reiteration of the government's strong-dollar doctrine. The US depends on continuous foreign investment inflows to fund its large current-account deficit and a sudden sharp drop in the dollar might reduce the attractiveness of US assets to overseas investors. "If the US dollar depreciates gradually, there's no problem in funding the the current account. Investors who hold US-dollar denominated assets have hedged their currency positions. Investors are hedging by buying euro," Fukaya said. The European Central Bank is not expected to change policy at its governing council meeting tomorrow. Meanwhile, the dollar/yen was stable as the threat of intervention by the Bank of Japan, as well as the increase in supply of yen from previous market actions by the bank, help to support the US currency's downside. "Still the BoJ may react and the supply and demand situation is stable at the moment," Fukaya said.