The euro climbed within half a cent of last month's record high against the dollar today amid receding concerns about intervention and nervousness ahead of US data.
Yesterday, ECB president Mr Jean-Claude Trichet passed up an opportunity to express concern over the euro's strength, leaving markets with the impression that intervention to stem the currency's rise was not imminent.
Sentiment towards the dollar was also fragile ahead of US Treasury data on international flows into US assets in December, particularly after data last week showed the US trade deficit widened nearly 11 per cent in that month.
The euro rose 0.75 per cent to a peak of $1.2874 in the European mid-session, within a whisker of January's record high just below $1.29. The single currency was also 0.75 per cent higher against the Japanese currency at 135.80 yen.
The US Treasury is expected to release portfolio flow data for December at around 2 p.m. Irish time - which will be of particular interest given doubts over the ability of the United States to attract sufficient overseas flows to offset its current account deficit.