The euro staged a modest bounce back against the dollar as investors booked profits despite ongoing political and economic concerns in Europe. "Traders have sold the euro over the last couple of months and that's worked well for them," said Neil Mackinnnon, chief economist at ECU Group. Over recent days, the dollar has surged to near nine-month highs as investors fret about the political future of the EU following the rejection of the EU constitution by both France and the Netherlands and the current acrimony surrounding the future of the British rebate. In addition, the dollar, which was in the doldrums for much of the last couple of years, due to concerns over the US twin deficits, has been buoyed as investors place greater importance on developments related to yield differentials. While the European Central Bank is being urged to cut rates from 2.0 pct to help boost anaemic economic growth, the US Federal Reserve is poised to continue raising the cost of borrowing from the current 3.0 pct in a measured manner, possibly to 4.0 pct by the year's end. Today's meeting of EU leaders in Brussels is not expected to affect the euro too much, even though the deadlock over the budget and the UK's rebate is unlikely to be resolved, analysts said. The UK government has said it will veto any bid to cut its 3 bln stg rebate without a reform of farming subsidies, with the French refuse to discuss.