The euro was firmer against the dollar on Wednesday on reported Asian sovereign buying and continued short-covering, though it failed to make a sustained break above the key $1.35 level.

The single currency briefly hit an eight-week high of $1.3508 on EBS trading platform, but traders said the move attracted sellers on concerns European policymakers' slow progress in tackling the euro zone debt crisis did not justify further gains.

The euro stayed well supported after comments from European Central Bank (ECB) head Jean-Claude Trichet last week on near-term inflation pressures sparked talk of an earlier-than-forecast rate rise. This view was bolstered by a strong German ZEW sentiment survey and as the German government raised its forecast for 2011 economic growth.