AP, BERLIN -- The dollar rallied against the euro in early Thursday trading as markets seemingly ignored comments the previous day from the U.S. Federal Reserve suggesting the U.S. economy may slip into a recession.

The 15-nation euro was down against the dollar, at $1.5604, compared with $1.5664 in late New York trading. In other currencies, British pound also dipped to $1.9804 from $1.9885 overnight. But the dollar slipped against the Japanese currency, to 102.83 yen from 103.09 yen.

The dollar has suffered amid worries about the fallout from the U.S. subprime lending crisis and the possibility of a recession. In prepared testimony to U.S. Congress' Joint Economic Committee on Wednesday, Federal Reserve Chairman Ben Bernanke did not use the word recession, but came the closest to date to suggesting that possibility, given a trio of crises -- housing, credit and financial -- that has pummeled the country.

Yet analysts suggested that a scattering of better-than-expected economic data out of the U.S. has helped bolster the dollar and that markets were waiting for the release Friday of non-farm payroll data in Washington.

At the same time, a disappointing report early this week on German consumer optimism, which failed to pick up in March, could also be keeping the euro under pressure, said James Hughes, an analyst at CMC Markets, as traders look ahead to next week's rate decision by the European Central Bank.

''The Eurozone retail sales figure ... will be closely watched and could ultimately provide the next directional signal as after the disappointing German reading on Tuesday, anything to suggest that this malaise may be stretching right across the Eurozone could ultimately increase the pressure on (ECB President Jean-Claude) Trichet to effect a rate cut sooner rather than later,'' Hughes said.

Higher interest rates, used to combat inflation, can help bolster a currency by making certain types of investments more attractive.

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