* Euro weaker on Russian sanction fears
* US dollar steady against euro after Tuesday's rally
* Australian dollar gains on higher than expected inflation
(Changes dateline from LONDON, adds details, updates prices)
By Karen Brettell
NEW YORK, July 23 The U.S. dollar held near
eight-month highs against the euro on Wednesday as worries over
tougher sanctions on Russia and their potential impact on
fragile euro zone growth weighed on the single currency.
The dollar broke above technical resistance against the euro
on Tuesday after U.S. inflation data showed that prices were
increasing, but that inflation was not fast enough to make the
Federal Reserve more likely to increase interest rates at a
The greenback slightly extended these gains in earlier
trading on Wednesday as geopolitical concerns in Europe weighed
on the euro, though the price moves were relatively muted.
"The Euro/dollar has broken some higher profile chart
levels, but there hasn't been convincing follow through," said
Bob Lynch, head of currency strategy at HSBC in New York.
The euro was last unchanged on the day at US$1.3465.
It is down from US$1.37 two weeks ago.
Further escalation of tensions between Russia and the
Ukraine could weigh further on the euro if more trade sanctions
are enforced on Russia.
"Europe is directly exposed to Russia by trade - Germany in
particular - so sanctions could potentially have a negative
impact on the euro," said Ian Stannard, a currency strategist at
The dollar gained 0.16 percent against the British pound to
US$1.7034, after Bank of England minutes failed to boost
expectations of an interest rate hike by year-end. GBP/
The dollar index, which tracks the greenback against
a basket of six major currencies, was steady on the day at
80.764, not far from a Tuesday high of 80.837 touched on
expectations that higher U.S. interest rates are on the horizon.
The Australian dollar was the largest mover of the major
currencies, gaining 0.60 percent against the U.S. dollar after a
higher-than-expected reading of a key gauge of underlying
inflation in June dented market speculation of future rate cuts.
(Additional reporting by Jemima Kelly in London, Editing by W