The euro briefly edged up against the dollar today after the European Central Bank (ECB) president hinted at a possible September rate increase by saying "strong vigilance" was needed to stem inflation risks.
The ECB earlier kept rates on hold at 4 per cent as expected.
In a press briefing, Jean-Claude Trichet said the ECB was watching volatile markets closely and added that recent trading action was part of a "normalisation of pricing risk."
The euro rose to $1.3675 from about $1.3661 before the release of Mr Trichet's remarks. However, the euro came back to its pre-Trichet level, trading slightly down at $1.3654.
"The 'strong vigilance' remark hinted at a September rate hike move instead of October," said one analyst.
"However that has been largely in line with expectations and so the euro hasn't really moved that much."