The euro hit a five-month peak versus the Swiss franc and rose against sterling and yen on Wednesday, after eurozone policymakers signalled rates may rise more than forecast if growth or inflationary pressures pick up.
However the euro failed to make progress against the dollar, with investors reluctant to sell the greenback ahead of this week's first batch of potentially market-moving US data.
The yen retreated from the previous session's 2-week highs against the dollar and euro, consolidating gains made after strong Japanese capital spending data prompted an unwinding of extreme short positions in the Japanese currency.
Shifting interest rate expectations for Japan are now giving investors jitters about holding carry trades, involving borrowing the low-yielding yen to buy higher-yielding assets, analysts said.
Rate expectations in the eurozone were given a boost after European Central Bank Governing Council member Axel Weber said interest rates might have to rise more than currently foreseen if upward risks to inflation come to pass.
Fellow council member Erkki Liikanen also highlighted the importance of monitoring inflation risks, adding that rates at 3 percent are still historically low in nominal and real terms.
In contrast, the US Federal Reserve is seen keeping rates at 5.25 percent for now, with some investors now expecting that the next move will be a cut rather than a hike.
"The general support for the euro is that the Fed is on hold and the ECB still has plenty of rate hikes to delivered in the next six to nine months," said Peter Frank, senior FX strategist at ABN Amro. For now the consensus is for the ECB to hike to 3.25 percent in October and then once more by year end, before pausing.
By 1132 GMT, the euro was up around a third of a percent at 67.90 pence and 149.26 yen. It also hit a 5-month peak against the Swiss franc at 1.5850 francs.
Versus the dollar, the euro ticked lower to $1.2796 ahead of the release of the US Institute for Supply Management (ISM) August non-manufacturing survey at 1400 GMT.
The index is seen edging up to 55.0 from July's 54.8.
"If there is something within the detail that suggests a sharp decline in inflation pressures, that's the sort of thing that could hit the dollar," said ABN's Frank.
The Australian dollar fell after data showed that Australia's second-quarter gross domestic product grew a smaller-than-expected 1.9 percent from a year ago - its weakest pace in three years.
The Reserve Bank of Australia left interest rates unchanged at 6.0 percent on Wednesday, as expected, though many investors say rates will have to rise again.
The Canadian dollar ticked lower against the US dollar ahead of a Canadian rate decision at 1300 GMT, forecast to result in steady rates of 4.25 percent. For investors the focus will be on whether the central bank mentions the recent strength of the Canadian currency. The yen shed half a percent to 116.65 yen per dollar, off a two-week low around 115.55 yen hit on Tuesday.