LONDON (AFX) - The euro continued to lose ground in midday trade following its failure to test parity with the dollar and is likely to remain under pressure over the next few trading sessions, dealers said. "Economic data releases will not help its cause," said Mitul Kotecha, currency strategist at Credit Agricole Indosuez. Even though the euro zone economic sentiment indicator for June was better than expected at 99.6, Kotecha pointed to the decline in business confidence. "Strong data is not going to help the euro," he said. "What we're seeing is profit-taking. There was a lot of build-up to parity." And Nigel Anderson, economist at Royal Bank of Scotland, warned that the data has raised worries of further weakness in the coming months. This, he said, would be a more serious sign of a loss of momentum in what are still early days for the upswing. CAI's Kotecha said it will be important to see if euro/dollar ends the day above or below the 0.9815 level. A drop below would be a negative signal, whereas a rise above could prompt consolidation around these levels, he said. Whatever happens, Kotecha doubts that the euro's surge has stalled for good. "It's just a healthy correction," he said. The markets will also be assessing comments later from European Central Bank president Wim Duisenberg to the European Parliament, Intervention fears continue to push dollar/yen higher and confirmation by US Treasury Secretary Paul O'Neill that the Fed intervened on behalf of the Bank of Japan last Friday was generally seen as a "warning sign" for further central bank intervention, WestLB currency strategist Michael Klawitter said. O'Neill suggested that individual governments should decide whether or not to intervene. Despite this short-term respite, CAI's Kotecha thinks the dollar will remain vulnerable as capital flows to the US shrink, noting recent IMM data showing that the dollar's weakness is being increasingly driven by a decline in long-term capital flows to the US. Meanwhile, sterling was slightly higher despite a dearth of data with most market participants focusing on the start of the latest Monetary Policy Committee rate-setting meeting tomorrow.