LONDON (Thomson Financial) - The dollar recovered some ground as traders squared up positions ahead of a raft of US economic data.
The euro's move as high as 1.5250 usd during yesterday's session proved short-lived as investors awaited further clues on the health of the US economy and what the Federal Reserve will do at its next rate-setting meeting on March 18.
'Many are now looking for the ISM services index and ADP payroll survey today for near term direction, whilst the non-farm payrolls on Friday will also be keenly awaited,' said James Hughes, analyst at CMC Markets.
'The crunch point is going to be if the credit crisis of last year is seen to impact elements of corporate activity and if this is indeed the case then the greenback may well find itself under renewed pressure in the near term,' he added.
Both the upcoming data and the corporate news may well determine whether the Fed cuts its benchmark funds rate by 75 basis points to 2.25 pct or by 50 basis points to 2.50 pct.
Elsewhere, attention will focus on Thursday's interest rate decision from the European Central Bank.
Though the ECB is unlikely to follow the lead across the Atlantic, there are growing expectations that the central bank's president Jean-Claude Trichet will sound a more dovish tone in his ensuing press conference.
Daragh Maher, senior FX strategist at Calyon, said he will be looking at tomorrow's press conference to see if there are any hints about intervention to stem the export-sapping rise in the euro.
'The likelihood is that the market will become progressively de-sensitised to the chatter if there is no meaningful threat of action,' said Maher.
'Tomorrow's ECB meeting will be the next port of call to see how potent the intervention threat becomes,' he added.
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