The dollar weakened today before this week's US Federal Reserve policy meeting. Most traders anticipate an interest rate cut but see the need for more to halt a US economic slowdown.
Most currency dealers are expecting a half-percentage point cut in the US central bank's 6.0 per minimum lending rate.
"The possibility of a surprise means that the market will be loath to do anything beforehand," said Mr Steve Barrow, currency strategist at Bear Stearns in London.
The dollar was trading at around $0.9245 to the euro today, down a fraction from Friday's New York close and more than a cent below Thursday's one-month high.
Many analysts viewed the dollar's gains against the euro last week as a correction to its steep decline in the preceding weeks and said the single currency's recovery from last year's record lows was still intact.
For a longer-term outlook the meeting of deputy finance ministers of the Group of Seven industrialised countries in Rome on Wednesday could offer insights to the new US administration's foreign exchange policy, dealers said.
Reuters