Euro on shaky ground

Traders have seen the euro's value fall by 20%

The euro has regained some ground, as pressure grows on the European Central Bank to act to restore confidence in the currency.

The euro fell to a lifetime low against the dollar on Wednesday.

It sank to 93.59 cents before climbing back above 94 cents in early trading on Thursday.

Its previous low was 93.9 cents, set on 28 February.

Some analysts say the euro will remain weak if US stocks sustain this week's rally, as investors will switch money from Europe to the US.

The euro regained ground as shares fell on US markets.

"Investors will probably test the euro's downside until European Central Bank officials express concerns over a weak euro," one currency dealer said.

Some traders said that comments by far-right Austrian leader Joerg Haider, who warned that Austria could pull put of the European Union, provided the catalyst for the fall.

Pressure on ECB

Deutsche Bank's Kenneth Landen says that until the European Central Bank acts, then dealers will continue to sell the currency.

The Confederation of British Industry's Kate Barker said: "It may well raise rates in the next few months...I don't think it will have a very big effect on the currency. "

Her view is that the currency is being driven lower by a long-term perception that Europe will not enjoy the same strong as the US.

'Bearish' prospects

"The only thing holding the euro at this level, which is a very low one, is the negative tone equities here in New York have taken," said John Schein, vice president at Generale Bank.

"The prospect on the euro remains bearish for now."

Greg Anderson, who follows foreign exchange developments at Fleet in Boston, said the euro's weakness reflected the low confidence that European authorities would enact the type of economic reforms that would lead to growth rates similar to those in the US.

He said investors were "looking for clarity and vision in long-term policies" such as on taxes to convince them to commit money to Europe, but were not seeing it.

Eric Nickerson, currency strategist Bank of America, said the dollar was benefiting from a perception that last week's stock sell-off was simply a correction rather than an end to the bull market of most of the 1990s.

"Domestic demand is still strong. There is not much reason to sell," he said.

The ailing euro has fallen nearly 20% against the dollar since its launch at the beginning of last year.