The euro staged its first five-day rally against the dollar in more than a year, reaching its highest since mid-October, on signs that the US economy is cooling.

The turnaround will be welcomed by the executive committee of the European Central Bank when it meets today.

Committee members are thought unlikely to announce a further rate rise to support the currency.

According to Mr Derek Keogh of Anglo Irish Bank, there are several reasons for the turnaround. He pointed to the poorer growth prospects in the US as well as a deterioration in its corporate earnings outlook.

"Suggestions that US industrial production could slip are very beneficial for the euro," he said.

As Mr Tony Norfield, global head of foreign exchange at ABN Amro, noted, the "oil for euros" rumours continued to dominate the day's trading.

However, he added that rumours that the euro would be supported as oil producers such as Russia and Venezuela would follow Iraq have been denied.

A United Nations Security Council panel this week said it allowed Iraq to set up a euro-denominated bank account for future oil sales. The euro climbed to $0.8577 from $0.8489 on Tuesday, the first time in 13 months it has gained on five consecutive trading days.

The currency was boosted when a report from the National Association of Purchasing Management showed a larger than expected drop in US manufacturing in October.

A productivity report due out today is likely to underline the possibility of slowing US growth.

One of the biggest catalysts of the euro rally was last Friday's report of slower-than-expected US economic growth for the third quarter.

The momentum was reinforced as reports showed consumer confidence fell more than expected in October.

It is likely, however, that the poor climate on stock markets may be mostly responsible for this.

But some analysts doubt the euro's rally will last beyond the next few days, particularly if intervention fails to materialise.

Others, of course, are more positive. At the ACCA graduation ceremony last night, Mr Pat Cox MEP said this was not an unprecedented currency decline.

"Despite the oil shock, the euro zone has a relatively low balance of payments current account deficit standing at only $12 billion (€14 billion), whereas the US has a current account deficit of $412 billion or 4 per cent of its GDP."