The dollar edged higher towards a recent seven-month high against the euro today amid expectations the Federal Reserve would raise interest rates steadily.
This week will see the minutes from the Fed's latest meeting where it raised interest rates to 3 per cent and the central bank's preferred measure of inflation, the PCE index.
Expectations for a steady rise in US interest rates have boosted the dollar by more than six per cent against the euro so far this year.
By 7:30am the dollar was up slightly on the day at $1.2545 per euro, close to a seven-month high of $1.2534 set last week. Against the yen it stood at 108.01, near a one-month high around 108.30.
European Central Bank President Jean-Claude Trichet and US Treasury Secretary John Snow speak at separate events later in the session. The Fed's minutes are due on Tuesday while the PCE index will be released on Friday. Other US data include a preliminary reading of first-quarter growth.
The euro faces challenges this week with surveys on German economic sentiment and business climate set to show sluggish results. Dealers also said the euro could stay under pressure this week due to worries that French voters may oppose the European Union treaty in a referendum on Sunday. Latest opinion polls give the anti-treaty campaign a slender lead.
A rejection by France could scupper the EU constitution, which requires the approval of all 25 member states to go into force. The Netherlands will also have a referendum on June 1st but polls show the chances the voters will accept the constitution are getting slimmer.