The dollar was slightly stronger against the euro Thursday as financial markets awaited an interest rate decision by the European Central Bank.
The 12-country euro bought US$1.3136 in early European trading, down from US$1.3171 in New York late Wednesday.
The U.S. dollar was also stronger against other major currencies, buying 104.96 Japanese yen, up from 104.70 yen in New York late Wednesday. The British pound bought US$1.9094, down from US$1.9128 the previous day.
Traders expect the European Central Bank to keep interest rates unchanged, but are focusing on what bank President Jean-Claude Trichet says afterward.
"The market is interested in whether Trichet will say something that will effectively moderate the hawkish remarks made by senior ECB officials," said Minoru Shioiri, a senior manager of foreign exchange at Mitsubishi Securities in Tokyo.
Until a series of the latest economic data showed a slackening of growth in the euro zone, ECB leaders had made comments suggesting the bank's willingness to take action to contain inflation.
The euro is likely to be sold if Trichet's comments are viewed as moderating that stance.
Analysts have credited the dollar's recent strength to positive words this week from the U.S. Federal Reserve chairman in testimony to Congress. However, as markets await figures on U.S. non-farm jobs Friday, they warn that Alan Greenspan's words alone will not be enough to bolster the dollar.
The euro soared from about US$1.20 in September to an all-time high of US$1.3667 at the end of December, powered by concerns over the U.S. budget and trade deficits. The dollar has since regained some ground, but those worries remain and analysts think the recovery could be temporary.