The dollar continued its assault on the euro Tuesday, jumping to a new multi-month peak amid disappointing euro zone economic data.
European PMI surveys showed weakness in the Italian service sector, cementing expectations of further stimulus from the European Central Bank.
The ECB makes its next policy decision Thursday, and while few economists expect any changes this month, most think the central bank will signal a willingness to inject cash if the pace of recovery does not pick up.
Meanwhile, activity in the U.S. service sector expanded at a notably faster rate in the month of July, according to a report released by the Institute for Supply Management on Tuesday.
The ISM said its non-manufacturing index climbed to 58.7 in July from 56.0 in June.
The dollar rose to $1.3365 versus the euro, its highest in more than nine months.
Choppy dealing left the buck at $1.6875 versus the sterling ahead of this week’s Bank of England interest rate call.
U.K. services activity growth strengthened to an eight-month high in July, raising the likelihood that the Bank of England will bring forward its first interest rate hike into late 2014.
The buck sat still at Y102.55 versus the yen after recent gains.
The Bank of Japan is expected to keep policy on hold at its two-day meeting ending August 8.