The dollar staged a surprise rally against the euro and the yen on Tuesday in thin trade made worse by market jitters ahead of the September 11th anniversary.
Technical problems on news and data delivery from Reuters hampered some areas of the market early in the session, but traders said core dealing was unaffected and the dollar gained on liquidation of stale long euro positions.
Traders said with volumes down, relatively active buying from a US investment bank earlier was enough to push the dollar up and keep it there most of the early European session.
"The dollar went a bit higher this morning and it's stayed there. Now it's quiet - it's a combination of September 11th, Iraq, everything. The risk appetite now is very low," said one European trader.
By 11:30 a.m. Irish time, the euro was down a third of a per cent at around $0.9754, having earlier slid to its lowest for about two weeks. The greenback stood at 119.37 yen, near its two-week high but still well within its recent ranges.
News that the US embassy in Indonesia was closed for security reasons, worries over the possibility of a US war with Iraq and confusion over the latest proposals to revive the ailing Japanese economy contributed to the uncertainty.