The euro rose against the dollar this morning, after new inflation figures indicated that interest rates in Europe would rise this year.

This morning the dollar stood at 1.2134 against the euro, while the single currency was at 1.4577 to the pound.

However, the expected decline of the dollar in coming weeks may not yet materialise.

There is a growing belief in the US that the Federal Reserve's interest rate hikes may not be at an end after all.

Following 14 straight increases, the dollar has slightly dipped recently as experts predicted the Fed would not increase above the 4.25 per cent rate.

However, after this week's US industrial output data showed the market had enjoyed a solid increase in December, general opinion appears to be that another raise is on the way.

US inflation figures for December are due out this afternoon, which will have a strong bearing on whether the euro will continue this morning's gains over the long term.