<b>European currency tops $1.19 before retreating, also scores against yen./b
May 27, 2003: 5:07 AM EDT
LONDON (Reuters) - The four-year-old euro completed its remarkable recovery Tuesday, racing to record highs against the dollar -- as well as the yen -- as demand for the single currency's yield advantage showed no sign of cooling.
Traders reported the euro hit a high of $1.1914 in Asian trade, beating the previous record of $1.1886 reached on the day of the euro's launch in January 1999, though it cooled off those gains by the start of European trade.
Dealers say with the euro in uncharted territory, the market is focusing on round-number targets -- with $1.20 up next -- and investors are still happy to keep pushing it higher, given the lack of objection to the move by the European Central Bank.
"What we've seen on this whole move is that any pullbacks have been fairly modest and the risk may well be that the same sort of thing will be seen again," said Rob Hayward, senior currency strategist at ABN Amro.
"European officials continue to suggest they are not particularly concerned with the performance of the euro...and it may be politicians are holding their breath hoping the central bank will offset some of this with a cut in interest rates."
At 5 a.m. ET (0900 GMT), the euro was fairly steady from late Monday levels at $1.1888, and was also flat on the yen after hitting an all-time high of ¥138.92.
The dollar was steady on the day at ¥116.80 after Japan's top financial diplomat Zembei Mizoguchi delivered Tokyo's latest warnings that Japan would take action in foreign exchange markets to prevent excessive swings in rates.
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