Further signs that the German consumer may be starting to spend point to interest rate rises rather than cuts next year, according to analysts.
Credit data for the euro zone released yesterday means the European Central Bank will be on heightened inflation watch, according to Mr Aziz MacMahon, economist at Ulster Bank Markets.
However, in mixed news the figures also revealed that overall money supply came in a little below expectations, although still above the ECB's target rate.
As a result the euro remained broadly steady on some profit taking.
The focus of European traders was also on the testimony by the Federal Reserve chairman Mr Alan Greenspan to the Senate Banking Committee.
According to Mr MacMahon the strong growth in private sector credit is very important.
"It shows that low rates are stimulating borrowing which did not happen in Japan. The news will also put the European Central Bank on heightened inflation alert."
However, he added that there will not be a rate rise before the first quarter of 2000 as inflation overall will be held down by product and labour market competition and a moderately strong euro.
The rate cut in April was a quasi-emergency and the ECB will eventually want to take some of that back, in the same way that the Fed did earlier this year, he added.
Other analysts said the euro had reached the top of its cycle for the moment and it would need fresh news to spur it higher.
The currency traded almost as far as $1.0691 before closing at $1.0621 from $1.0628.
It also closed at 66.75p against sterling from 66.88p a day earlier. As a result, the pound closed at 84.80p from 84.92p a day earlier.
Weaker than expected euro zone money supply and a drop in orders data from German machinery and plant construction company association VDMA contributed to the euro's slide.
Growth in the euro zone's money supply, as measured by the broad M3 indicator, slowed in June. M3 money supply expanded by 5.0 per cent on a 12-month basis, slower than the rate of 5.2 per cent reported in May.
The May figure had been revised downwards from the 5.3 percent originally reported last month.
M3 comprises cash in circulation, overnight deposits, other short-term deposits and marketable instruments and is regarded by the central bank as an indicator of future inflationary trends in the medium term. The ECB's target for M3 growth this year is 4.5 per cent.
In contrast, credit to the private sector in the euro zone showed an annualised growth rate of 10.9 per cent in June, faster than the 10.5 per cent reported in May and well ahead of the single digit target.
