The US dollar hit a new low against the euro today but found some support against the yen due to fears over intervention.
After a largely subdued session, the euro reached new highs above $1.2868 as European markets opened.
Trade had been thinned in Asia by a holiday in Japan, the region's largest foreign exchange market, added to the general reluctance to build fresh positions, dealers in Singapore said.
They said the market was trading cautiously ahead of a briefing by European Central Bank chief Mr Jean-Claude Trichet at noon. Mr Trichet is due to attend discuss today's meeting in Basle of rich-country central bankers.
The market would sift through the briefing for any clues on the issue of the US dollar weakness and euro's strength. After that, the next major opportunity to hear official views on exchange rates will be at the Group of Seven meeting in early February.
The last G7 meeting, in September, sparked a dollar sell-off that has not ended yet. Since early September the euro has risen by about 20 per cent against the US currency, pulling the trade-weighted dollar to early 1996 levels.
The dollar has been hobbled in recent months by low US interest rates and a widening gap between US savings and investment. So far the burden of the dollar weakness has fallen mainly on the euro and some other European currencies.
Mr Alan Greenspan, chairman of the US Federal Reserve, is scheduled to speak tomorrow in Germany. But, despite the weak employment data, few expect him to depart from his recent statements on monetary policy and the US growth outlook.