The euro remained near multi-week highs against the dollar and yen on Tuesday in New York. Traders continued to show confidence in the higher-yielding currency in hopes of an economic recovery.

The euro climbed to a fresh monthly high of 1.3436 against the slumping U.S. dollar. The single currency has been trending higher throughout the week.

Testifying before the Joint Economic Committee, Federal Reserve Chairman Ben Bernanke noted that the U.S. economy has contracted sharply since last autumn, although he said that recent data suggests that the pace of contraction may be slowing.

On the economic front, the Institute for Supply Management said its index of activity in the service sector rose to 43.7 in April from 40.8 in March, with a reading below 50 indicating a contraction in the sector. Economists had been expecting a more modest increase to a reading of 42.2.

The European currency stabilized at a 13-day low near 0.8850 against the British pound. The euro has been trending lower for about 10 days.

UK's small and medium sized manufacturers recorded a sharp decline in total new orders and output volume, the latest quarterly SME Trends survey conducted by the Confederation of British Industry showed. However, firms expect the pace of fall to moderate slightly over the coming three months.

The euro remained in a range near a three-week high against the Japanese yen on Monday. The single currency has been range-bound throughout this week, touching as high as 132.86.

Traders also considered data showing Eurozone producer prices in March recorded the biggest annual fall in 22 years, adding more pressure on the central bank to cut its key rate this week.

According to a report released by European Union statistics agency Eurostat, industrial producer prices slipped 3.1% annually in March, larger than the revised 1.7% decrease in the prior month. The annual decline in March was larger than the expected 2.9% decrease and the biggest since February 1987. Month-on-month, producer prices declined 0.7% in March compared with a 0.4% drop in February. Economists were expecting a monthly 0.6% fall.

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