The euro gained for the first day in three against the dollar and yen after European central bankers said inflation and the economy may slow, an indication they will consider cutting interest rates next month.
Demand for euros rose as some analysts said that a rate reduction would bolster growth among the 12 nations using the euro, helping lure investment to the region. European Central Bank policy makers, who haven't cut rates in a year, are slated to meet on Dec. 5.
"It definitely appears as if they're lining up their ducks to deliver an interest-rate cut," said Alex Beuzelin, senior currency analyst at Ruesch International in Washington.
"It should support the single currency that the ECB is finally coming around" to try to boost growth, he said.
The euro rose to US$1.0098 per euro at 6:15pm in New York from US$1.0041 on Friday. It gained to Japanese yen 121.63 from Japanese yen 120.94.
ECB council member Jaime Caruana said the annual inflation rate will probably fall below the bank's maximum target pace of 2 percent early next year. Council member Klaus Liebscher said the region's economic outlook "has clouded a bit in recent months."
The European Commission this week cut its forecasts for growth in the dozen-nation euro region, adding to speculation that the ECB will lower its 3.25 percent benchmark rate.
Friday's losses in the dollar pared its gains in the week. It is 0.3 percent stronger against the euro and 0.7 percent stronger against the yen, its first weekly gain in four, as better-than- expected reports on consumer confidence, retail sales and jobless claims bolstered expectations that the expansion will accelerate.
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