Euro-dollar gains extended tagainst a backdrop of fresh remarks from ECB's Trichet that track earlier commentary and show no let-up in the ECB Pres. stance on inflation and price concerns.
The dollar rose against the yen for the first time in six days as traders speculated the Federal Reserve won't cut interest rates next month.
The currency increased from a three-week low versus the yen as a chart traders use to predict price movements signaled last week's 2.4 percent decline was too large to be sustained. The yen dropped against the South African rand and the Brazilian real as speculation the worst of the financial crisis is over led investors to buy higher-yielding assets funded in Japan.
``It's not going to be an express train toward a much stronger dollar, but it will trade stronger slowly and gradually,'' said Jeff Gladstein, global head of foreign- exchange trading at AIG Financial Products in Wilton, Connecticut. ``The U.S. is not going to have as deep a downturn as everyone initially portrayed.''
Futures on the Chicago Board of Trade show an 84 percent chance the Fed will hold its target lending rate at 2 percent at its next meeting on June 25, up from 82 percent odds on May 9. The balance of bets is for a cut of a quarter-percentage point. There's a 10 percent chance of an increase to 2.25 percent in September. The central bank has lowered the fed funds target 3.25 percentage points since September.
``It's doubtful that the Fed can afford to cut more,'' said Benedikt Germanier, an analyst at UBS AG in Stamford, Connecticut, in an interview on Bloomberg Television. ``We are short on the euro-dollar. Our three-month forecast is $1.47.''
Chicago Fed President Charles Evans said in a speech today in Illinois that the central bank's current interest-rate stance is ``appropriate.''
The pound increased from a two-week low against the euro and climbed versus the dollar after a surge in U.K. producer prices led traders to reduce bets that the Bank of England will cut its 5 percent target lending rate next month.

Japanese stocks advanced for the first time in three days after technology firms predicted higher earnings and as investors snapped up companies whose sales are relatively resilient to an economic slowdown.
Konica Minolta Holdings Inc., the No. 2 maker of film used in liquid-crystal displays, jumped the most in seven years after forecasting a profit gain. Japan Tobacco Inc., the world's third- largest cigarette maker, climbed the most in a month, while Takeda Pharmaceutical Co. sent drugmakers higher. Nisshin Oillio Group Ltd. soared the most in three decades after the century-old cooking oil maker said profit may double this year.
Almost the same number of stocks rose and fell on the benchmark.
Higher commodities prices prompted Merrill Lynch & Co. to cut its 2009 growth forecast for Japan. Crude prices rose 1.8 percent to a new record of $125.96 a barrel on May 9, extending their gain to a sixth day.
European stocks advanced for the first time in three days as takeover speculation lifted shares of U.K. retailers and an oil discovery in the North Sea boosted the profit outlook for energy companies.
DSG International Plc and Kesa Electricals Plc, the largest U.K. electronics retailers, rallied on optimism Best Buy Co. may seek European bid targets after partnering with Carphone Warehouse Group Plc. Kingfisher Plc, Europe's biggest home- improvement retailer, rose for a fourth day amid speculation a private equity firm may make a bid. Dana Petroleum Plc surged to a record on its oil find.
DSG, based in Hemel Hempstead, England, gained 5.3 percent to 74.25 pence. Kesa, the owner of the Comet chain, rose 4.9 percent to 227 pence.
Best Buy, the largest U.S. electronics retailer, and London-based Carphone Warehouse signed a 1.1 billion pound ($2.15 billion) joint venture last week. Under the venture, Best Buy plans to open stores under its brand name across Europe, beginning in the U.K. Carphone Warehouse said it has ``very ambitious'' expansion plans.
Mark Webb, a spokesman for DSG, and Kesa spokesman Alex Pettifer declined to comment on ``speculation.'' Best Buy spokeswoman Susan Busch did not immediately return an out of hours answer-phone message.
Kingfisher jumped 3.7 percent to 151.7 pence. Buyout speculation has surrounded Kingfisher since at least 2005. The retailer became a more attractive target after its stock fell 39 percent last year as Britain's housing market slowed.

U.S. stocks rose, rebounding from the first weekly drop in a month, after retailers posted better-than- estimated earnings and the world's largest bond insurer said it has enough cash to cover the securities it guarantees.
AnnTaylor Stores Corp. and Collective Brands Inc. helped spur gains in all 30 companies in the Standard & Poor's 500 Retailing Index on results that topped analysts' estimates. MBIA Inc. climbed for the first time in four days after the debt guarantor said it has ``ample liquidity'' and won't have to raise more capital. Research In Motion Ltd. and Apple Inc. rallied on speculation new phones will boost earnings. Limited Brands Inc., the owner of the Victoria's Secret lingerie chain, added 74 cents to $18.69. TJX Cos., the owner of the T.J. Maxx and Marshalls chains, increased 75 cents to $31.79. Nordstrom Inc., the century-old luxury department-store chain, climbed 99 cents to $35.38.
Retailers also advanced as crude oil for June delivery fell 1 percent to $124.68 a barrel in New York. Gasoline futures slipped 0.5 percent.
Wal-Mart, the world's largest retailer, climbed 87 cents to $58.05. Citigroup Inc. raised its share-price forecast to $67 from $57, citing the potential for increased earnings at its overseas stores. Wal-Mart reports first-quarter earnings tomorrow.
McDonald's, the biggest restaurant company, increased 86 cents to $60.10.