LONDON, July 22 (AFP) - The dollar held firm against other major currencies Thursday as expectations of further rises in US interest rates grew in the wake of upbeat comments from US Federal Reserve chairman Alan Greenspan.
The single European currency stood at 1.2251 dollars against 1.2259 late on Wednesday in New York.
The dollar traded at 109.75 yen from 109.77 on Wednesday.
Two speeches by Greenspan this week setting out the Fed's semi-annual economic outlook have cemented expectations the central bank will raise the cost of borrowing at its rate-setting meeting on August 5.
Greenspan's testimony Wednesday to the House of Representatives did not alter much a positive assessment given a day earlier to a Senate banking panel, though he did warn that job growth has been hindered by strong US productivity gains.
"Greenspan's upbeat message on the economy caught many dollar bears by surprise, triggering position reversals," said Kristjan Kasikov, currency strategist at investment bank CALYON.
The Fed switched gears last month by raising short-term interest rates by a quarter point from 46-year lows of 1.00 percent in a first step to head off inflation.
But concerns about the pace of the US recovery heightened expectations that upcoming rate increases would not be aggressive.
Now analysts expect the key Fed funds rate to rise to the "neutral" level of about 3.50 percent by the end of next year.
However, while the dollar has been buoyed by Greenspan, analysts said the very light US economic calendar for the remainder of the week was unlikely to inspire further dollar buying.
"Following the short-covering rally of the past two days, the dollar's upward move is likely to run out of steam as the dollar positive news flow is ebbing," said Michael Klawitter, currency strategist at WestLB.
With the key S and P 500 index of US shares failing to hold above the 200 day moving average, US equities were not providing the support they had over the past couple of days, he added.
"US equities also remain vulnerable favouring caution among dollar investors," said Klawitter.
The euro was changing hands at 1.2251 dollars from 1.2259 late on Wednesday in New York, 134.31 yen (134.61), 0.6663 pounds (0.6659) and 1.5327 Swiss francs (1.5320).
The dollar stood at 109.75 yen (109.77) and 1.2516 Swiss francs (1.2495).
The pound was at 1.8389 dollars (1.8409), 201.54 yen (202.11) and 2.3000 Swiss francs (2.3003).
On the London Bullion Market, the price of an ounce of gold stood at 394.85 dollars from 398.50 dollars late on Wednesday.