NEW YORK (AP) - The dollar continued to lose ground Thursday, with the euro now poised to break above the key $1.24 level and encouraging U.S. economic data no longer able to give the greenback much support.The euro advanced to a fresh 9-week high versus the dollar and a 15-week high against the yen as the dollar mostly declined against its major rivals in technically driven trading.
The euro's rise comes ahead of U.S. July farm payrolls data Friday, which are expected to increase by a robust 180,000. Trading had been very calm overnight ahead of the numbers, but investors weren't willing to let the prospect of healthy jobs data get in the way of further dollar weakness.
Late afternoon, the euro was at $1.2377 up from $1.2340 late Wednesday. The euro briefly touched an intraday peak at $1.2403, but couldn't hold above $1.2400. The euro also lifted to a three-and-a-half month high versus the yen at 137.80 from 137.01.
The dollar managed a minor gain versus the yen, changing hands at 111.33 yen from Y111.10, but it slipped to 1.2584 Swiss francs from 1.2615. Sterling was at $1.7802 from $1.7814.
The release of the payrolls data is "likely to spark further movement'' in currency markets, with more downside risk for the dollar, said Brian Rose, currency strategist at Bank of Tokyo Mitsubishi in New York.Payrolls are expected to have expanded 180,000 in July, following a 146,000 increase in June.
There was little in the way of fresh developments behind the dollar's drop, which came after the U.S. currency had edged modestly higher overnight. In recent weeks, the dollar has fallen broadly despite strong economic data, reversing a portion of the gains racked up earlier in the year.
The move brought the euro near the key $1.24 level for the first time since late May, restoring it to the range in which it had traded before French voters rejected the European Union constitution. The euro had exited late trading at $1.2585 on Friday, May 27, before the Sunday vote. On Monday, May 30, the single currency dropped as low as $1.2465 and on Tuesday, it dipped as far as $1.2296, according to electronic foreign exchange broker EBS.
The recent dollar selloff is turning positions centered on the euro falling into liabilities for traders. Analysts reckon welling could accelerate as investors bail out.
While the dollar's stumble seemed to have no immediate trigger, it fits within a broader fundamental trend, said John McCarthy, director of foreign exchange at ING Barings in New York.
"The prospect of higher U.S. rates here has been fully recognized,'' said McCarthy. "The defeat of the EU constitution by France and the Netherlands has faded into the background and now we are seeing better numbers out of Europe.''
Nonetheless, he calls the euro surge surprising, and reckons it also has a lot to do with a combination of market positioning and technical factors. The euro's breach of a "significant'' resistance level at $1.2260 and then a second one Thursday at $1.2350 had helped drive the move.
The speed of the euro's snapback has persuaded speculative investors to move more quickly to pare back dollar long positions.
Additionally, there is talk of some long-term investors selling the dollar, having grown increasingly disheartened at their bullish bets as the U.S. currency failed to react to a string of positive data over the last 10 days.
Activity in the currency market also seemed to have little to do with two important central bank decisions out earlier in the day. The European Central Bank held rates steady at 2 percent, further stamping out speculation that it might cut rates.
The Bank of England, meanwhile eased rates to 4.5%, from 4.75% - the first reduction in interest rates since July 2003 and a widely expected response to a slowing economy. In its statement, the bank left its next move open.
Elsewhere, China's central bank reiterated a pledge to increase flexibility in its exchange rate while providing no hint of a timetable, the latest in a series of statements that have left markets guessing about how much influence market forces will have on the yuan.
The People's Bank of China said in its second quarter report published on Thursday that it will "adjust the exchange rate's floating range at an appropriate time'' based on market developments and economic and financial trends.