Dollar rose broadly on a rise in risk aversion but the euro has rebounded strongly in trading today

The single currency fell further yesterday, mirroring a drop in equities as investors booked profits from an extended rally.

• Dollar rose broadly, extending its pullback from a one-year low against the single currency, as traders trimmed short positions in the US dollar following broad losses so far this month.
  
• Falling global equities also gave rise to a slight easing in risk appetite, which allowed investors to take profits in the recent rally in the euro and ahead of this week's Federal Open Market Committee meeting.
  
• However, in the afternoon, the greenback halted its climb and gave back some of its gains, following a slight rally in stocks with the euro climbing over half a cent from a day low of 1.4612.
  
• In trading today, the single currency has continued to advance amid speculation that the Fed statement tomorrow evening will reaffirm confidence in the global economic recovery.
  
• Analysts have suggested that there is unlikely to be a shift to an upward trend in the dollar, seen briefly yesterday, with forecasts that U.S. policy makers will soon signal a possible withdrawal of economic stimulus measures.