By William L. Watts & Lisa Twaronite, MarketWatch
Fixes date of Bernanke testimony.
LONDON (MarketWatch) -- The dollar was mixed versus major rivals Tuesday, but slipped versus the European single currency as speculation mounted over a possible Brussels-led rescue of Greece and other indebted southern European countries.
The single currency traded at $1.3706, up from $1.3674 versus the dollar in North American trade late Monday. The euro slumped to an eight-month low versus the dollar last week as worries rose about the potential for default by Greece, Portugal, Spain and other countries on the periphery of the euro.
The rebound was credited in part to news that European Central Bank President Jean-Claude Trichet planned to fly back from Australia earlier than originally scheduled to attend a Thursday meeting of European Union leaders to discuss the economic outlook. Read about market reaction to Trichet's flight change.
Although the ECB said Trichet had always intended to attend the meeting, the move sparked ideas Brussels may be working toward some sort of plan to shore up debt-burdened countries. Read First Take.
"A bailout at this point would contradict the rhetoric from ECB officials to date," said Jane Foley, research director at Forex.com. "That said, euro-zone officials will be aware that an increase in contagion from the Greece situation would increase the chances of a euro crisis."
Strategists at UniCredit in Milan cautioned against reading too much into the bounce, saying a return above the $1.3830 level is needed to calm selling pressures, while a pullback to the $1.3725 to $1.3750 range would merely offer a new selling opportunity.
The dollar index (DXY 80.13, -0.17, -0.21%) , which tracks the greenback against a trade-weighted basket of six major currencies, fell slightly to 80.212 from 80.309 in late North American trading on Monday.
The U.S. unit gained ground against its lower-yielding Japanese counterpart as Asian equities markets turned higher, increasing investors' interest in riskier, high-yielding assets. European equity markets were mixed.
But most major currencies remained in narrow ranges, as investors were wary of taking aggressive new positions after a late sell-off in U.S. equity markets. That sell-off preceded testimony from U.S. Federal Reserve Chairman Ben Bernanke scheduled for Wednesday.
"Overall, the tone was cautious, particularly after Wall Street's late slide, which came on leverage account selling and some position adjustment ahead of today's testimony," said analysts at Action Economics.
The dollar bought 89.63 yen, up from 89.39 yen late Monday.
The British pound fell 0.1% versus the U.S. dollar to $1.5574.
