A dearth of major data this week meant the dominant themes-an apparent slowdown in the United States, strength in Europe and recovery in Japan- would probably not be challenged.

These helped the euro ascend to a one-week high of $0.9670 in late trade, having already climbed one cent on Friday to $0.9646, its loftiest New York close in almost three months.

"The market's looking for an excuse to exploit the relative cyclical strength between Europe and the United States," Steve Xu, a treasury economist at Standard Chartered in Hong Kong, told Reuters Television."So I think a break of 97 cents is very likely," he added.

The dollar also lost some ground to the yen to stand at 106.11 yen compared with 106.37 in U.S. Trade on Friday.

Traders said the market was expecting an upbeat assessment of the Japanese economy from the EconomicPlanning Agency when it releases its monthly report on Tuesday.

Any evidence that the economy is nearing a self-sustaining recovery tends to go hand-in-hand with speculation that the Bank of Japan will soon end its zero interest rate policy.

Few were brave enough to buy yen aggressively, however, given that Japan faces a general election in just six day's time.

Analysts say opinion polls still suggest the ruling LDP will retain power, but a very large proportion of undecided voters means the result cannot be taken for granted.

As for the euro, it held firm on the yen at 102.56 yen against 102.46 in late U.S. Trade on Friday.

Traders reported talk of Japanese demand for euros to buy shares in Deutsche Telekom's latest 15 billion euro stock tranche, payment for which is due this week.

Some 30 percent of the issue is being alloted to institutional investors and dealers reckon up to a quarter of that might be Japanese interest.

Another temporary factor lifting the euro late on Friday was talk thatselling related to Belgian group Interbrew's acquisition of the brewing interests of Britain's Bass had been completed.

The rumours helped the euro rebound smartly late on Friday and it built on that on Monday, rising to 63.80 pence from a low on Friday at 62.60 pence.Dealers also expected the euro to find support in the German Ifo survey of business sentiment due on Tuesday. Market forecasts are for a further improvement to 101.4 in May.

Meanwhile, the outlook for euro-zone interest rates was very much a steady one.

European Central Bank (ECB) board member Sirkka Hamalainen told Italian business daily Il Sole-24 Ore on Saturday that the bank does not plan to raise interest rates again any time soon.

This echoed a comment from Bundesbank President Ernst Welteke last week that the bank was on hold until September at least.

The Swiss franc was another gainer from relative growth perceptions after the Swiss National Bank hiked interest rates by an aggressive 50 basis points last week.

The franc hitan 11-week high on the dollar around $1.6145 this afternoon compared with $1.6365 late on Friday in Tokyo.

Otherwise, the only U.S. Data of real note this week are monthly and quarterly trade figures on Tuesday. Analysts are predicting a slight narrowing in the deficit for April, but for the first quarter as a whole the shortfall is seen hitting a record $107.52 billion.

Analysts noted that if that level was maintained for the full year, the deficit would easily surpass Australia's entire annual gross domestic product. "It tends to be overlooked, but the US needs to borrow a huge amount of other peoples' savings to fund its deficit," said a US Bank dealer."And that's why the dollar's so vulnerable if the Statesloses even a little of its attractiveness as a place to invest."