The euro hovered near a one-year high against the dollar on Thursday, as the strength of the European economy contrasted with risks of spreading banking crises in the United States, a debt ceiling standoff and a potential recession there.
The risk-sensitive Australian dollar struggled to stay above the key 66 cents level.
The yen held steady as the Bank of Japan kicked off its two-day policy meeting, the first under new governor Kazuo Ueda.
The single European currency rose 0.05 percent to $ 1.10415, heading again towards the peak recorded last night at $ 1.1096, the highest level since April of last year.
The dollar index, which measures the performance of the US currency against six major currencies, the most influential of which was the euro, remained stable at 101.41, after declining 0.42 percent on Wednesday when it touched its lowest level in nearly two weeks at 101.00.
Germany again revised its growth forecast upwards on Wednesday, and a survey showed consumer confidence continued to increase.
By contrast, spending on producer goods in the US fell more than expected in the latest data, adding to concerns of a deflation. Morale has not been helped by the First Republic's collapse, as well as the ongoing debate over raising the US debt ceiling.
A solid eurozone economy coupled with core inflation which is still rising and not easing could push the ECB to maintain its sharply hawkish stance, supporting the euro.
At the same time, she added, US inflation remains firmly decoupled from growth, which keeps pressure on the Federal Open Market Committee to tighten policy further.
Meanwhile, the dollar nearly settled at 133.63 yen. The market expects BoJ Governor Ueda to leave the ultra-loose monetary policy unchanged on Friday.
Australian dollar traders are growing more confident that next week the Reserve Bank of Australia will keep interest rates unchanged for a second meeting, following some decline in consumer price inflation data on Wednesday.
The currency settled at $0.6603 today, Thursday, after falling to a one-and-a-half-month low of $0.6592 in the previous session.
