The euro climbed to within striking distance of record highs against the dollar in light pre-holiday dealing on Thursday, as the market awaited a batch of US economic data for new trading clues. Analysts said the euro resumed its uptrend on a break of key technical levels rather than fundamental reasons, against a backdrop of worries about the United States' ability to attract flows to cover its huge current account gap.
A holiday in Japan further dampened trade, although traders said US data releases including durable goods orders at 1330 GMT could perk up US trade.
"We do have a lot of numbers coming out in the US The durable goods is a fairly important number which gives us some insight on capital expenditure in the US," said Riz Din, foreign exchange strategist at Barclay's Capital in London.
"You combine that with the fact that trading is thin right now and there's scope for a volatile afternoon," he added.
The euro had risen as high as $1.3464 by 1230 GMT, a shade lower than the record high of $1.3470 hit on December 7, after spending most of the week trapped in a range below $1.34. It was up half a percent from late New York levels.
The yen was also firmer against the dollar at 103.96, gaining just under a quarter of a percent from New York levels.
The euro showed little reaction to comments from French Finance Minister Herve Gaymard.
Gaymard said the world risked an "economic catastrophe" unless the United States worked with Europe and Asia on currency movements at a February meeting of the Group of Seven rich nations.
Some analysts said the US data due on Thursday could prompt covering of short dollar positions if stronger than expected although they said markets were still bracing for renewed dollar weakness in early 2005.
Reports on US durable goods orders and new home sales for November are due at 1330 GMT and the University of Michigan's December consumer sentiment index for December is due at 1445 GMT.
"People have been putting on fresh positions in the past 24 to 48 hours, which is unusual for this time of year but profit-taking did come a week or so earlier than usual this year," said Adam Myers, foreign exchange strategist at Societe Generale in London. "It suggests that there will be a further dollar decline in the new year."
Economists' median forecast is for a 0.6 percent rise in the November durable goods orders.
The dollar shrugged off a batch of usually positive factors on Wednesday including a rally on Wall Street, a drop in oil prices and data showing solid US growth in the third quarter.
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