"It's not really about European or US fundamentals," said David Coleman, Chief economist at CIBC World Markets.

"It's Y2K-related - investors are looking to diversify into the most liquid areas, and the most liquid is the US market."

The euro was trading just below $1.01 at 1105 GMT, a little over half a cent above the lifetime low of $1.0034 hit on Monday. The euro was around 1.3 yen above an all-time low of 102.13 yen set earlier this week.

The Reuters Eurozone Purchasing Managers' Index for manufacturing gave a reading of 57.0 in November, matching its 18-month high set in October. French manufacturing and output hit record levels in November, and the German manufacturing PMI inched to 55.33 in November, the fastest rate of expansion since July, 1998. But analysts and dealers said the euro's failure to break above key resistance at $1.0150, coupled with the failure of the Swiss franc to appreciate beyond 1.58 to the dollar, kept the outlook sickly for the single currency.

"As long as we stay below $1.0150, the down side is still in focus," said a dealer from a German bank in Frankfurt.

"Our traders are looking for new lows, and for parity," headed. The yen fluctuated in a half-yen range against the dollar and a one-yen range against the euro, with major market moves likely to hinge on comments from Japanese officials, dealers said. Traders detected no sign of Bank of Japan intervention in Asia after its forays into the market on Monday and Tuesday.But analysts said dollar/yen could weaken later as people were sceptical about the effectiveness of Japan's action to curb yen strength.

The US currency was trading above 102 yen, around one yen above last week's four-year low. Earlier on Wednesday, the dollar received a slight boost after an ambiguous statement by BOJ Governor Masaru Hayami prompted speculation of a further easing in the central bank's monetary policy.