The euro hovered near a one-month high against the dollar and a record peak versus the yen on Tuesday after data suggested the prospects for higher interest rates have lessened in the United States but risen in the euro zone.
The euro hit its highs in the previous session after the euro zone manufacturing index for June showed its best reading in six years, while separate data showed US factory activity in the same month grew at the slowest pace in 10 months.
The stronger-than-expected production data for Europe supported expectations that the European Central Bank could accelerate the pace of rate hikes.
In contrast, the US figures suggested that the world's largest economy may be slowing down, feeding speculation that the Federal Reserve could be ready to pause in its two-year tightening campaign.
"The euro zone data confirmed that the ECB is on track to raise rates," said the chief trader at a European investment bank in Tokyo. The US figures show "that the impact of the rate rises is gradually affecting the economy but not in drastic ways. That means the Fed's policy is working," he added.
The US central bank followed its 17th straight rate increase last week with a statement saying slower economic growth could help contain inflationary pressures.
For its part, the ECB is seen leaving rates on hold at its policy meeting this week but many in the market are betting on a rate rise in August, following the bank's hike to 2.75 percent last month.
The euro was little changed at $1.2805 after rising as high as $1.2823 on Monday, its highest since June 7. The single currency was also nearly flat at 146.80 yen, in sight of the all-time high of 147.05 yen struck on trading platform EBS in the previous session.
The dollar edged down to 114.60 yen from around 114.70 yen in late New York trade, dented as Japanese exporters stepped up to sell the US currency.
Dealers said that trade was thin and market players hesitated to take aggressive positions because US financial markets are closed on Tuesday for the Independence Day holiday.