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Euro rises to seven-week high on dollar

Tuesday, February 18 17:25:16

The dollar today fell against the euro to its lowest in seven weeks after a gauge of manufacturing in New York state slowed in February, stoking uncertainty about the direction of the Federal Reserve's monetary policy.

The New York Fed's "Empire State" general business conditions index fell to 4.48 in February from 12.51 in January. Economists polled by Reuters had expected a reading of 9.0.

"The data have been pointing to a loss of momentum in the economy and have raised doubts about the trajectory of Fed tapering," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Janet Yellen, in her first public comments as Fed chief on Feb. 11, emphasized continuity in the U.S. central bank's policy strategy of cutting asset purchases by $10 billion a month, but some suspect the Fed could slow the pace of its reduction in stimulus following weak U.S. economic data.

The euro rose to $1.3769, marking a seven-week high against the dollar and surpassing a key resistance of $1.3740. The euro barely reacted to a mixed German ZEW survey of analyst and investor sentiment. It was last at $1.3756, up 0.4 percent on the day.

"The momentum has been in favor of the euro," said Mark McCormick, foreign exchange strategist at Credit Agricole in New York.

The euro also raced to a six-week peak against the Swedish crown of 8.9180 crowns after consumer prices in Sweden fell more than expected in January and revived talk of an interest rate cut.

The euro rose as well against the British pound to trade at 82.37 pence after softer-than-expected UK inflation data.