The currency rebounded from near an eight-week low before a European Central Bank meeting at which President Jean-Claude Trichet may focus on risks to consumer-price growth. Deutsche Lufthansa AG workers received a 5.1 percent pay increase from the German airline to stay ahead of the fastest inflation in more than 16 years. The ECB will keep rates at 4.25 percent today, after raising them last month, a Bloomberg survey of economists showed.
The euro traded at $1.5465 against the dollar at 12:02 p.m. in London, from $1.5408 in New York yesterday, when it touched $1.5398, the weakest since June 16. The 15-nation currency traded at 169.25 yen, from 169.16 yen.
The dollar fell to 109.43 yen, from 109.79 yesterday, when it advanced to 109.88, the highest level since Jan. 10.
Expectations the ECB will refrain from cutting interest rates to battle inflation helped the euro gain 5.7 percent against the dollar, 7.3 percent against the British pound and 3.7 percent against the yen this year.
German sales abroad in June increased 4.2 percent from May, when they fell 3.4 percent, the country's Federal Statistics Office in Wiesbaden said. That's the biggest increase since September 2006. Economists expected a gain of 1.8 percent, the median of 12 forecasts in a Bloomberg News survey showed.
The Frankfurt-based ECB, which raised borrowing costs last month, publishes its decision at 1:45 p.m. local time, and Trichet holds a press conference 45 minutes later. The Bank of England left its key rate at 5 percent today.
The inflation rate for the euro region rose to 4.1 percent in July, the fastest pace in more than 16 years and more than double the ECB ceiling.
Traders pared bets the ECB will raise the main refinancing rate for a second time this year. The implied yield for the three- month Euribor contract for December was at 5.04 percent today, down from 5.07 percent at the end of last week.