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Tokyo (pte024/03.06.2005/11:40) - The euro rose about 1 per cent against the dollar on Wednesday, despite suffering a seven-month low.
Traders say, however, that due to shaky ground in the euro zone, the outlook for the currency still looks poor compared with healthier prospects in the US, which currently has a broader interest rate advantage.
Following France's and the Netherlands' rejection of the EU constitution - after which the euro fell about 3.5 per cent in less than a week - concern about the plight of the euro, and the political and economic outlook of the European Union intensified.
Mitsuru Sahara, forex manager at UFJ Bank http://www.ufjbank.co.jp/ippan/english/ said: "With the political events out of the way, and with the selling so sharp, the euro is recovering as investors scoop it up at bargain levels," said Mitsuru Sahara, forex manager at UFJ Bank.
"But the European Central Bank http://www.ecb.int will not likely raise rates for some time, which will put focus on interest rates and growth differentials with the U.S., so there is no reason to buy back the euro except for position adjustments."
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