The dollar rose a fifth of a cent against the euro in early London trading today, with the market focused on the January US employment report due this afternoon.
The key element in trading today will be how many jobs the United States created in January after it saw a gain of only 1,000 in non-farm payrolls in December, analysts said.
The dollar probably has more scope to decline following a disappointing jobs report that it has to rise in wake of a surprisingly strong report, analysts said. The euro is trading around $1.2520, while dollar/yen is fluctuating above 106.
Expectations for the jobs report, due at 1.30 p.m., were only heightened by overnight remarks by US Federal Reserve governor Mr Ben Bernanke.
Dresdner Kleinwort Wasserstein analysts highlighted his statement that "I'm pretty confident we'll see some big numbers pretty soon".
DKW analysts added that the market would need to see a gain of over 200,000 in January payrolls in order to see any up-side surprise for the dollar.
