The U.S. dollar was little changed Tuesday despite strong talk from Washington about addressing the budget deficit and pleas from Europeans for the United States to take action to prop up the currency.
Traders also were cautious ahead of major events coming up, including the Jan. 30 elections in Iraq and a meeting of the Organization of Petroleum Exporting Countries, as well as the Group of Seven industrialized nations meeting of finance ministers and central bankers.
The dollar was slightly down against the euro at US$1.3059 from US$1.3048 late Monday, and bought 103.18 yen, up from 102.72 yen Monday. The British pound was at US$1.8781, slightly weaker than US$1.8793 late Monday.
The weak dollar has been good for U.S. exports, making American products cheaper overseas, but has had the opposite effects on European goods, making them more expensive.
On Monday, French Finance Minister Herve Gaymard, following a meeting with his German counterpart Hans Eichel, appealed to Washington to address concern over the U.S. trade and budget deficits, which have been weighing on the dollar.
"The imbalances at the origin of the dollar's structural fall ... persist and everything must be done to remedy them," Gaymard said.
Treasury Secretary John Snow said the Bush administration was committed to getting the federal budget deficit under control as a way to help support the dollar's value. But he also said other action needed to be taken to correct huge global trade imbalances, saying there will be bigger markets for U.S. exports as trading partners grow.
Many traders also are looking ahead to a statement from the G7 leaders after their Feb. 4-5 meeting in London.
Japanese Finance Minister Sadakazu Tanigaki said Tuesday that the position of the G7 was "basically unchanged," echoing remarks by Snow.
The 12-nation euro initially fell against the dollar after its 1999 debut and bottomed out at 82 cents in October 2000. But it has been moving higher on concerns about the U.S. deficits, rising from $1.20 in September to an all-time high of $1.3667 at the end of December.