Further clues on the path of U.S. interest rates may come from speeches later in the day from Fed Governor Mark Olson and especially Atlanta Fed President Jack Guynn, who will speak on the economic outlook and housing market. Euro zone retail sales rose 2.8 percent on the year in April, beating the consensus forecast for a 2.3 percent rise. Meanwhile, the Bloomberg/NTC euro zone retail PMI hit its highest level in more than two years in May, at 56.3. "This seems to be a step in the right direction for faster recovery ahead," David Brown, chief economist at Bear Stearns said in a research report. Strong euro zone data has fuelled talk that the ECB could raise rates by as much as 50 basis points this Thursday, although most analysts expect a more modest 25 basis point hike to 2.75 percent. Some say it could then hike again in July. However the upside potential for the euro could be limited, with euro zone finance ministers making clear they do not want the single currency to extend its export-denting rally much beyond current levels around $1.30. Austria's Finance Minister and current chairman of EU finance ministers Karl-Heinz Grasser said on Wednesday that as long as the euro stayed in a $1.20 to $1.30 band, it was okay. "There's definitely concern that a break above $1.30 would not be good for euro zone growth, which is export-led," said Kamal Sharma, currency strategist at Bank of America. French Finance Minister Thierry Breton, Luxembourg's Jean-Claude Juncker and Spanish Economy Minister Pedro Solbes all indicated the euro was reaching the end of its tolerance level, after it hit 1-year highs near $1.30 on Monday. Elsewhere, the Australian dollar hit seven-week lows below US$0.74 after the Reserve Bank of Australia left interest rates unchanged at 5.75 percent, as expected. The Reserve Bank of New Zealand is expected to leave rates unchanged at 7.25 percent when it makes its policy decision at 2100 GMT.