Dollar heading in right direction: Juncker

The Euro group of countries welcomed the recent recovery of the dollar but said the euro remained overvalued.

"Things are developing in the right direction," Jean-Claude Juncker told Reuters after an EU leader’s summit in Brussels. Juncker is prime minister of Luxembourg.

"Things are more in line with the economic policy and commitments of the United States that have been stated in recent months," he said.

The greenback remained in the doldrums despite comments by U.S top policy makers in support of a strong dollar. With this, Eurozone officials expressed frustration earlier this year. .

"A strong dollar is good for the United States. A strong dollar is good for the global economy," Juncker said on Monday.

When asked whether the euro was now in fair value against the dollar, Juncker said: “In line with what we have previously said, we still think that the euro is still overvalued.”

Dollar boosted due to oil price

On Monday, the dollar, which sank to a low of more than $1.60 to the euro in July, was trading at around $1.47.

The dollar rose to its highest level this year boosted by a sharp drop in oil prices. U.S. crude oil futures CLc1 fell $4.51 to $110.95 a barrel in afternoon trading on Monday after Hurricane Gustav weakened to a Category 2 storm before hitting the coast near a key port that supports most of the Gulf of Mexico oil and gas drilling operations.

An international finance source said that in March, Europe, Japan and the U.S discussed joint cooperation to rescue the dollar if it would extend the sharp losses.

The European Central Bank faced criticism earlier this year from some European leaders, including French President Nicolas Sarkozy, alarmed at the strength of the euro that has made it harder for European exporters to compete.