The dollar steadied today to hover above recent four-month lows against the euro ahead of US economic growth data tomorrow and next week's Federal Reserve policy meeting.
After large swings earlier in the week, currencies were seen starting to settle as traders wait to see whether US gross domestic product figures due tomorrow and the Fed meeting on Tuesday give investors more reasons to dump dollars.
By 8.40am, the euro was steady from the US close at $1.2250, compared with four-month highs set in the previous session of $1.2323.
The dollar slumped at the start of the week on concerns the Fed may soon end its 18-month stretch of interest rate rises. But the currency had gained some traction in the last two sessions as investors squared positions before the two big US events.
Traders said some caution has crept into the market ahead of the US GDP release on expectations of a soft reading, with economists forecasting that growth slowed to 2.8 per cent in the fourth quarter from 4.1 per cent in the third quarter.