The euro tested a one-month high on the dollar today after the chief economist for the European Central Bank doused speculation that European officials are readying intervention to stem the dollar's decline.
The euro rose to a high of $1.2788 on the day, nearing an all-time high at $1.29. The common currency was last up 0.5 percent at $1.2760. The British pound was up 0.6 per cent at $1.8686, a fresh 11-year high.
The European currencies are bearing much of the brunt of the dollar's decline. A statement by the G-7 finance ministers Saturday, which largely supported the European complaints over the weakening dollar, has done little to alter the trend.
ECB economist Mr Otmar Issing indicated in an interview in the Sueddeutsche Zeitungtoday that there is no point in short-term action by central banks to influence exchange rates.
Mr Issing said the exchange rate is not a major target for the ECB, prompting the euro rally. The euro held back on Monday partly amid fears the Europeans were prepared to defend the dollar in the markets, as Japan has done repeatedly over the last year.
Elsewhere, dealers started to look ahead to tomorrow's congressional testimony by Federal Reserve chairman Mr Alan Greenspan.