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Improved growth forecast boosts euro vs dollar

The euro edged higher against the dollar on Tuesday helped by upward revisions to growth forecasts for the European Union.

NEW YORK: The euro edged higher against the dollar on Tuesday helped by upward revisions to growth forecasts for the European Union.

But caution prevailed in the foreign exchange markets, with the main currencies remaining within recent trading bands.

At 2200 GMT the euro was at $1.3744, up from $1.3735 late Monday.

The yen picked up ground against them both: the dollar slipped to 102.22 yen from 102.50 yen, while the euro dropped to 140.49 yen from 140.78.

The European Commission said Tuesday that the 18-nation eurozone was expected to grow 1.2 percent this year and 1.8 per cent in 2015, up from November's estimates for 1.1 per cent and 1.7 per cent.

Similarly, the full 28-member EU's economy will expand 1.5 per cent this year and 2.0 per cent in 2015, also both revised up by 0.1 percentage point.

"Recovery is gaining ground in Europe.... Rebalancing of the European economy has been progressing and external competitiveness is improving," EU Economic Affairs Commissioner Olli Rehn said.

"The worst of the crisis may now be behind us, but this is not an invitation to be complacent as the recovery is still modest," Rehn said.

That gave the euro a small spurt, and helped push US dollar bond yields down after they traded higher for the past week.

Markets remain cautious as they await more information on the pace of the US and Japanese economies.

On Thursday Federal Reserve Chair Janet Yellen will testify to the Senate Banking Committee on the economy and Fed policy.

Yellen's testimony to the House of Representatives counterpart two weeks ago was hardly revealing, except to show that the Fed remains fairly confident in its forecasts for growth this year despite the possibly weather-related sluggish activity of December and January.

The British pound pushed higher, to $1.6680 from $1.6656, while the dollar slipped against the Swiss franc, to 0.8866 franc from 0.8890.

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