The euro retreated from a 2-1/2-month high against the dollar on Wednesday as questions surrounding a eurozone rescue plan and unrest in Egypt caused some investors to take profits on its recent rise. The currency climbed as high as $1.3861 overnight, its best level since early November, but fell after a German government official said Berlin opposed allowing a eurozone rescue fund to buy troubled countries' debt.
Traders said winter storms in the Midwest and Northeast were keeping trading ranks thin on Wednesday, while clashes in Egypt between supporters and opponents of President Hosni Mubarak injected some uncertainty into markets. But the dollar and Swiss franc, usual beneficiaries of safe-haven buying, were only modestly bid, and traders said the euro remains in an uptrend and could yet test $1.40. An upside target was seen at $1.3950, around the 200-week moving average. The euro was last down 0.2 percent at $1.3804.
The dollar was up 0.3 percent at 81.55 yen and up 0.3 percent at 0.9375 Swiss francs. Sterling rose 0.2 percent to $1.6182. The euro has drawn support from expectations the European Central Bank will lift interest rates sooner than the Fed.
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