By William L. Watts & Lisa Twaronite, MarketWatch LONDON (MarketWatch) -- The U.S. dollar was flat to slightly lower versus major counterparts Tuesday and lost some ground against a rebounding euro as investors showed renewed risk appetite, strategists said. The European single currency, which had fallen to its lowest level in nearly nine months versus the dollar last week amid fears over Greece's budget woes and the potential for default, rose to $1.3643, up by 0.3% from Monday. Strategists at BNP Paribas said a jump in gold prices showed that the "liquidation effect" tied to rising global risk aversion has "run its course." U.S. stock index futures pointed to a higher open on Wall Street following Monday's Presidents Day holiday, while European equities were mostly higher. Read Indications. The BNP Paribas strategists said the euro could be in for a short-term rally. But strategists say continued nervousness over Greece's debt problems and uncertainty over a European Union rescue effort are likely to limit any bounce by the single currency. Read about E.U. pressure on Greece. A meeting of European Union finance ministers Tuesday is likely to be in the spotlight, said strategists at UniCredit Bank in Milan. "The absence of details on the Greece rescue plan is likely to pressure euro-U.S. dollar further ... likely to below this year's low at $1.3524," they wrote. "On the other hand, testing key resistance above $1.3840 seems too bold a target." Risk appetite was boosted earlier, with the Australian dollar rising against its U.S. counterpart after minutes of the most recent Reserve Bank of Australia meeting suggested that more interest-rate increases are coming. The minutes from the RBA's Feb. 2 meeting indicated further increases for the benchmark cash rate are likely, though not necessarily at the next meeting on March 2. See full story on RBA minutes. "Markets are likely to take this RBA statement as having a hawkish stance," said currency strategists at Brown Brothers Harriman in a note to clients Tuesday. Higher interest rates typically boost currencies because they raise the returns on assets denominated in those currencies. The dollar index (DXY 80.16, -0.17, -0.21%) , which tracks the greenback against a trade-weighted basket of six major currencies, traded at 80.159, little changed from Monday. The dollar traded at 89.95 yen, little changed from Monday. The British pound rose 0.2% against the U.S. unit to change hands at $1.5695. The currency posted little lasting reaction to data that showed British inflation jumped at an annual rate of 3.5% in January, driven in large part by a rise in the value-added tax back to 17.5% after the expiration of a temporary cut to 15%. In a letter to Chancellor of the Exchequer Alistair Darling, Bank of England Governor Mervyn King said the bank's rate-setting Monetary Policy Committee expected the jump to prove a "temporary deviation" from the 2% annual target and that inflation would likely fall back below target later in the year. Read about the U.K. inflation jump. The BOE governor is required to write the chancellor when inflation misses the target by more than a full percentage point.

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