Previous session overview : The euro dipped sharply across the board in European trading hours Wednesday after reports that Deutsche Bundesbank President Axel Weber will not be a candidate to replace Jean-Claude Trichet as president of the European Central Bank.
The reports sent the 17-country currency lower against the dollar, yen and pound, as Weber is famously tough on inflation, and was widely considered as the most likely candidate to succeed Trichet when his contract expires at the end of October.
Deciding Trichet's successor is the responsibility of euro-zone heads of government, who are currently engaged in a wholesale reform of the governance of the single currency area.
The dip in the euro breathed life into an otherwise quiet trading session in Europe, which saw the dollar firm against the safe-haven yen and Swiss franc after a sharp rally in U.S. Treasury yields boosted the buck.
The euro is at USD1.3696 in morning trading in New York.
The U.S. dollar was also higher against the Australian dollar, while trading little changed against the other commodity-linked currency of Canada.
The Canadian dollar is slightly higher in subdued early trading Wednesday as markets wait for congressional testimony from U.S. Federal Reserve Chairman Ben Bernanke later in the morning in the absence of any domestic market movers. The U.S. dollar is at CAD0.9948 from CAD0.9955 late Tuesday.
Market expectation : The euro is up against the dollar, but movements are constrained by Fed chairman Bernanke's speech later in the day and uncertainty surrounding a potential replacement for ECB president Trichet when his term ends later in the year. For now, the euro is likely to hold in a range as news of what the central banks might do plays out. Analysts say near-term support lies around USD1.3539, which is the 100-day moving average. Resistance is at USD1.3811, the open from Feb. 3. Read more