The euro appreciated by 0.2 percent at $1.0448 EUR=EBS, rebounding from $1.0352 on Tuesday, the lowest since January 2003.
Some analysts linked its modest rise to plans to rescue Montei dei Paschi di Siena, Italy’s second-biggest bank.
Others, though, said the European single currency’s movements were more related to temporary weakness in the dollar.
“What we might be seeing is when you’ve had such a strong run, like we’ve seen in the dollar, and you go into a period where liquidity is thin, people take profit and close out some positions,” said HSBC currency strategist Dominic Bunning, in London.
European markets were poised for one last burst of action before the end of the year on Thursday, with Italy expected to outline plans to rescue the world’s oldest and now its most troubled bank, Monte dei Paschi di Siena.
With investors in most major markets already in holiday mode, stocks, oil and metals drifted lower in thin trading and even the dollar eased off this week’s 14-year high.
Futures pointed to a slightly lower open on Wall Street SPc1 although U.S. shares remain very near all-time peaks. [FRX/]
Shares in Milan climbed 0.6 percent .FTMIB, flanked by the euro EUR= on hopes for a government bailout for Monte dei Paschi, while European shares .FTEU3 followed Asian markets down.
Sources told Reuters the bank failed to pull off a last-ditch private rescue plan on Wednesday, meaning a state rescue looked inevitable with reports in Italy on Thursday saying that could be completed between two to three months.
