The dollar edged up on the euro today as the market continued to scale back expectations of an aggressive cut in US interest rates seen likely next week after the previous session's firm inflation data.
Markets were also awaiting the verdict in the trial of Bank of France governor Mr Jean-Claude Trichet, expected later today. If Mr Trichet is found guilty in the banking fraud case, he will lose his bid to become next European Central Bank governor.
Meanwhile, dealers are increasingly eyeing Wall Street aware that US equities could emerge as a potential support for the dollar, with the broad Standard and Poor's index edging up to a fresh one-year high yesterday.
The dollar was a quarter per cent firmer versus the euro, compared with the previous New York close, at $1.1752, and testing key support for the single currency in that region.
But gains were tentative with the dollar within two cents of record lows versus the euro, and markets still expecting the Fed to cut by 25 basis point next week to make sure deflation does not take hold of the world's largest economy.
Mr Trichet, the anointed successor to Mr Wim Duisenberg, is on trial over his alleged complicity in the publication of misleading accounts at Credit Lyonnais Bank in the early 1990s.
Unless he emerges with a complete acquittal, he could lose the ECB race, possibly causing a ripple for the euro. But dealers do not expect a long-lasting effect on the single currency whatever the verdict, as ECB policy is unlikely to be affected.