Peter von Maydell, senior currency strategist at Credit Suisse First Boston, said: "Everything is very, very smooth, it's not like the markets are entirely back to normal yet, they are still on a learning curve, but volumes are picking up."

By the time Tuesday trading closed in London, the world's largest currency market, one euro bought $1.1761 and £0.7119 (71.2p) slightly lower but locking in most of Monday's gains against the dollar and sterling.

Some analysts predict that the pound could soon weaken to a level where it takes £0.77 to buy one euro. This is mainly attributed to the slowdown in the British economy and the prospect for a further fall in UK interest rates.

Euro weakness?

Most analysts predict that the euro will soon be weaker for the very same reasons. They say that the European Central Bank will be forced to cut interest rates to below 3% as Euroland's economy falters.

Trade in the old national currencies of the eurozone appears to have dried up completely as financial institutions seem to have opted for a complete changeover. Technically, trades in the euro's component parts, for example the Deutschmark, are still possible as they are legal denominations of the new currency.

European bond dealers, meanwhile, reported a flood of money into 'eurozone instruments', new government debt issued by countries that have joined the currency.

Yen trouble

But it is not the euro anymore that is in the spotlight. Since Monday the Japanese yen has shown surprising strength, pushing down the US dollar and gaining slightly against the euro as well.

The Japanese government blames both the launch of the euro and worries about the US economy for the dollar's weakness. Some analysts, though, say the "dramatic improvement" of the Japanese terms of trade with the United States was behind the yen's strength.

All systems go

The real test for the switch-over to euros will come on Wednesday when banks settle their books and find out whether their payment systems have coped with the new currency.

So far there have been hardly any glitches. The investment bank Warburg Dillon Read reported that it had mistakenly been paid five times for the same trade by an unindentified European bank. The money, some 620m euros ($732m), has already been returned .