The dollar drifted lower against the euro on Thursday amid some light profit-taking but stuck within a narrow range as most dealers stayed on the sidelines in a holiday-thinned session The US bond market and banks were closed on Thursday for Veterans Day. "Today there was a little bit of position adjustment from yesterday, with very little flows going through," said Ronald Simpson, managing director of global currency research at Action Economics in New York.
The dollar had posted minor gains against the euro on Wednesday after the Federal Reserve raised interest rates by a quarter percentage point.
Simpson noted, however, that given the light volume, it was difficult to give an assessment of the dollar's direction.
"With no data out and given thin market conditions, I think a lot of the traders in the office today pretty much decided that it really isn't worth the risk to get involved today," he said.
Market participants are instead bracing for Friday's fairly significant US data calendar. October retail sales, due at 8:30 am EST (1330 GMT) are seen showing a rise of 0.2 percent, according to a Reuters poll of economists.
The University of Michigan consumer sentiment survey is also scheduled for release, with Wall Street economists expecting a reading of 93.0.
By late afternoon in New York, the euro rose to $1.2896, slightly up on the day, according to Reuters data.
Analysts said sentiment on the dollar remains bearish despite a slew of supportive factors over recent sessions.
"It strikes me that the old faithful supports for the dollar are failing one by one," said Sean Callow, currency strategist at IDEAglobal in New York.
"Obviously the key one that kicked off was US payrolls - that didn't help the dollar. The retreat in oil prices, which a few weeks ago, would have been really good for the dollar - that also failed to help it. The stock market surged higher - nothing," he added.
Against the yen, the dollar fell 0.5 percent to 106.63, losing gains made Tuesday that sent the US currency to a two-week peak above 107.25 yen.
The dollar was at 1.1781 Swiss francs, down 0.3 percent on the day but up from an 8-1/2-year low touched Wednesday. Sterling, meanwhile, fell to $1.8427.
Analysts on Thursday also sifted through the latest batch of comments by European policymakers and officials expressing dismay over the euro's recent rise.
"(European officials) have put a little more two-way risk into the market ... although usually with these things you get diminishing returns," said Daniel Katzive, currency strategist with UBS in Stamford, Connecticut.
"It doesn't seem from the language that they are any closer to taking any real steps to prevent euro gains," he added.
European Central Bank President Jean-Claude Trichet, who injected caution into the market this week when he said the euro's rise against the dollar had been "brutal," referred back to those comments earlier on Thursday.
Since Monday, other ECB officials have joined Trichet in expressing concerns over the pace of the euro's rise.
In the near term, analysts said the officials' jawboning has been largely successful in at least placing traders in a holding pattern, slowing the euro's upward movement.
"You have jawboning from European officials and a lack of concern from US officials. So the market is really confused with what it wants to do with the euro," said Kathy Lien, chief strategist with Forex Capital Markets in New York.
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