NEW YORK (Bloomberg) — The dollar traded near a six-week high against the euro on speculation housing and job reports this week will ease pressure on the Federal Reserve to reduce interest rates this year.The US currency last week reached the strongest in three months versus the yen as traders cut bets the Fed will lower borrowing costs from 5.25 percent. US reports this week may show consumer confidence increased, employment growth accelerated and home sales gained.

"We have the dollar strengthening into the end of the year," said Stephen Halmarick, co-head of economic and market analysis at Citigroup Australia in Sydney. Data this week "will signal the Fed is on hold for quite a number of months."

The dollar traded at $1.3456 per euro at 7:30 a.m. in New York from $1.3442 late in New York May 25, when it reached $1.3412, the highest since April 11.It will rise to $1.32 by year-end, Halmarick said. The US currency was at 121.68 yen from 121.79 last week, when it reached 121.88, the most since February 13. The euro was quoted at 163.74 yen from 163.71.

Trading volumes may be limited as European and UK financial markets are closed today for a public holiday.

The dollar has risen 0.4 percent against the euro as the odds of a quarter-percentage point cut by the Fed in the next year declined to 26 percent from 37 percent May 18, according to a Credit Suisse index based on trading in interest-rate swaps.

A Conference Board report May 29 will probably show consumer confidence rose from an eight-month low. The Labor Department's payroll figures and an index of pending home resales are due for release June 1.

More traders are betting that the dollar will rise rather than fall, futures prices show.

Futures traders increased bets the yen will fall against the dollar. The difference in the number of wagers by speculators on a decline in the yen compared with those on a gain rose to 151,746 net short positions May 22, according to the Commodity Futures Trading Commission in Washington. A short position is a bet that an asset price will fall.

Volatility implied by one-month yen options stood at 6.43 percent, down from 7.28 percent at the end of last month. Traders quote implied volatility, a gauge of expected swings in exchange rates, as part of pricing options.

The euro may rebound from a six-week low against the dollar as investors have already finished reducing bets on the currency, said Ryohei Muramatsu, manager of Group Treasury Asia at Commerzbank in Tokyo.

Hedge funds and other large speculators decreased bets that the euro will rise against the dollar, data taken May 22 showed. Net euro longs fell 20 percent to 95,287, the biggest percentage drop since February, according to the CFTC.

"The euro adjustment has already run its course," said Muramatsu. Europe's single currency may rise to $1.35 against the dollar this week, Muramatsu said.

The yen may decline further to around 122.20 against the dollar over a week, according to technical charts some traders watch to predict price movements.

The yen had a fifth straight weekly loss against the US currency last week, the longest stretch since six weekly declines ended in October 2005, during which the Japanese currency dropped 5.4 percent. The yen this time lost 2.6 percent in five weeks.

"The pace of weakness this time was not as fast as in September-October 2005, so it seems like the yen has more room to go lower," said Masashi Hashimoto, a currency analyst at Bank of Tokyo-Mitsubishi UFJ in Tokyo. "Technically, the yen still looks bearish."

The Japanese currency may also be hurt by carry trades as gains in Asian and European stocks led investors to borrow in low- yielding currencies such as the yen or the Swiss franc to fund high-yielding assets elsewhere.

In the medium term, the yen may be underpinned by expectations that Japanese bond yields may rise further. Finance Minister Koji Omi said the Japanese government needs to take the prospect of higher bond yields into account as part of its plans to reduce spending.

The yield on the benchmark five-year note was little changed at 1.3 percent after climbing to 1.315 percent, the highest since January 9. Japan's benchmark rate of 0.5 percent, the lowest in the industrial world, compares with 3.75 percent in Europe.