TOKYO--The dollar rose against the euro on Wednesday to hover near a one-month high hit the previous day, continuing to draw support from gains in US stocks on hopes for an aggressive stimulus package from the Obama administration.

Persistent signs of economic weakness in the euro zone that may force its central bank to slash interest rates further also helped pushed the euro down against the dollar, as well as against the yen.

The dollar drew strength from early 2009 gains in Wall Street shares, which also helped the currency market to ignore dismal economic data including Tuesday's figures showing a steep drop in factory orders and pending home sales in November.

"US stocks, hopes for Obama, and a reversal of the broad dollar-selling positions made in December will support the dollar, possibly until Obama officially takes office later this month," said Kengo Suzuki, a currency strategist at Shinko Securities.

"But the state of the US economy is so miserable. That will prompt market players sooner or later to question the wisdom of extended dollar buying," Suzuki said.

The euro dropped 0.4 percent to $1.3470, after having tumbled as low as $1.3312 on trading platform EBS on Tuesday, its lowest since Dec. 12.

The euro was pressured after a drop in euro zone inflation boosted expectations the European Central Bank will continue to cut interest rates, which would likely reduce the appeal of the euro zone currency against the dollar and other major currencies.

The dollar index, a gauge of the greenback's performance against six major currencies, rose 0.3 percent to 83.105, in sight of a one-month high of 84.023 touched the previous day.

Traders will look to the ADP private employment report in the US due later in the day for clues to Friday's non-farm payrolls data for December from the government.

The dollar was up 0.3 percent at 93.95 yen, recovering from earlier drop on profit taking after it hit a one-month high of 94.65 yen on EBS on Tuesday. The Federal Reserve's most recent policy meeting suggested the central bank is concerned that downside risks remain substantial, although that did not dent the overall positive sentiment surrounding the dollar on Tuesday.