The dollar firmed in subdued late trade as market preoccupation with the possibility of fresh terrorist action on the anniversary of the September 11th attacks on the US faded slightly with no untoward incidents reported so far, dealers said.
But there was little on the data front to prompt activity and even less willingness to take on positions, they added.
The heightened alert status in the US has added to market paralysis. With the US authorities shutting down embassies in several countries and the US Navy warning shipping - especially oil tankers - in the Gulf to be wary, the tension is palpable, dealers added.
"There has been nothing specific to push the euro lower but it seems to be in line with the general dollar story so far," said David Mann, economist at Standard Chartered.
Despite its dip against the dollar, the euro help up well elsewhere. Notably dollar-yen rose above the 120 yen level while sterling dollar slipped below $1.55.
But the dollar's ascent may well be thwarted when the US current account deficit figures are released tomorrrow. Retail sales numbers on Friday could make it even worse, Mann said.
The current account deficit is expected to widen to a new record of $125.5 billion in the second quarter from 112.5 billion in the first quarter due to the rising merchandise trade gap and negative investment flows. Meanwhile, if auto sales were to be stripped out, the retail sales numbers may look very soft, economists said.
Also still to come are several key events. For one, US President George Bush's speech to the United Nations on Thursday will be closely watched, especially as the campaign for war on Iraq hots up. On the same day, US Fed chairman Alan Greenspan testifies before congress.
PA