The euro rose for the fourth straight session against the dollar on Friday, coming within 1-1/2 cents of a recent record high as lack of strong opposition from euro zone policymakers encouraged further buying.
European Central Bank chief economist Mr Otmar Issing, speaking in Davos yesterday, reiterated the bank's worries about sharp movements in the euro, echoing other ECB officials.
But ECB policymakers have stopped short of mapping out how they would reduce volatility and curb euro strength, with no strong indication they would use interest rates as an option.
Mr Issing and ECB president Mr Jean-Claude Trichet are both due to speak at the World Economic Forum in Davos later today.
"The market has realized that in order for policy to become significantly negative for the euro, you need to get all the policymakers to agree the moves have gone too far and the dollar is undervalued. But in this case there is no uniform opposition," said Shahab Jalinoos, senior currency strategist at ABN AMRO.
"You will also need the US to support the view too. But we are long way off from that."
By 9 a.m. EST, the euro rose to $1.2775, compared with $1.2712 in late New York on Thursday and a Monday low of $1.2331. It hit an all-time high of $1.2898 last week.
The yen kept a low profile at 106.05 per dollar on wariness of Japanese intervention, staying just below this month's three-year high near 105.70.
"I think 105 yen is the defense line for Japanese authorities now but they are taking a one yen buffer," said Junya Tanase, foreign exchange strategist at JP Morgan Chase.