The dollar extended its gains on the euro on Wednesday, pulling further off this week's record low as the market weighed European concerns about the greenback's drop against apparent US nonchalance.
European Central Bank council member Christian Noyer was among the latest European policymakers to comment, saying authorities remained vigilant on the euro's level but there was no need to over-dramatise, although he did add intervention was always "something that can be used".
Federal Reserve Chairman Alan Greenspan led the US camp, saying on Tuesday the dollar's decline had yet to cause inflation or deter foreign capital inflow that is needed to fund the gaping US current account deficit.
By 1235 GMT the dollar had gained 0.82 percent on the day to $1.2657 per euro, more than two cents firmer than the record low near $1.29 it hit on Monday when its losses totalled 13 percent in two months. Against the yen, the dollar was steady at 106.20 yen, just above a three-year low around 106 set a week ago.
Its relative stability against the Japanese currency is largely owing to market wariness the Bank of Japan could step in to curb its gains at any moment, after the central bank was detected intervening last week.
The dollar was also rebounding against the Swiss franc, up nearly one percent on the day at 1.2330 francs after veering down to a seven-year low on Monday.
The US trade deficit - cited as a key reason for recent dollar weakness - will come back into focus at 1330 GMT, when data due for release is expected to show the November gap widened slightly to $42 billion from $41.77 billion in October.
Bundesbank President Ernst Welteke, German Chancellor Gerhard Schroeder, German Economy Minister Wolfgang Clement and French Finance Minister Francis Mer all weighed into the euro debate after ECB President Jean-Claude Trichet indicated concern about "brutal" exchange rate moves on Monday.
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