By: Hillel Fuld

The EUR hovered near a 10-week peak vs the USD on Wednesday, supported by strong U.S. corporate earnings that also boosted global shares. The greenback was on the back foot, slipping against a currency basket and coming under selling pressure against the JPY as Japanese exporters went short on the U.S. currency.

The euro inched in narrow ranges as investors awaited testimony from Federal Reserve Chairman Ben Bernanke later in the day and looked for fresh factors to extend the single currency's corrective trend.

"People are less worried about the euro than they were a month or two months ago," said Johan Javeus, head of global strategy at SEB in Stockholm. He said signs of deterioration in the U.S. economy and receding worries about euro zone public finances helped to support the EUR in holiday-thinned trade. "But the market doesn't know which foot to stand on. It's not extreme risk aversion or risk demand," he added.

Bernanke gives his semi-annual testimony on the economy and monetary policy at 1800 GMT. After a run of negative U.S. data, investors waited to see if his statement would boost speculation the Fed may offer more monetary accommodation. By 0747 GMT, the EUR was 0.1 percent higher on the day at $1.2895, having pulled back from $1.3029 hit on Tuesday, its strongest since May 10.

Traders said the euro may face opposition to make gains in the near future as investors take profits on a rally which has taken it up more than 8 percent since hitting a 4-year low of $1.1876 in the beginning of June.

But there were also rumors of bids in the euro at $1.2860/65 and then at $1.2820, with a mixture of stop-loss sell orders and bids then expected around $1.2780/2800. Analysts said EUR movements may be limited before the results of bank stress test are announced on Friday. Some said the results may relax the concerns about how European banks would cope with a deterioration in the region's economy.