The Globe and Mail reports in its Friday, Oct. 9, edition that the American dollar recently surged to an 18-month high, supported by high interest rates, strong economic growth and ongoing inflation risks. A Reuters dispatch to The Globe reports that Europe's challenges, including large deficits in France and potential stress in Italy, are, however, expected to influence dollar performance in the coming months. The greenback has appreciated about 5 per cent against the euro this year, helping to lift the dollar index. One observer says, "The euro remains under pressure, limiting one of the dollar's main alternatives." Investors are weighing whether the European Central Bank can continue fighting inflation without inflicting greater damage on an economy already showing signs of strain. Euro zone inflation surged more than expected in September and is likely to increase further in the coming months on soaring energy costs, keeping pressure on the ECB to raise rates. Citi's Dan Tobon says: "The asymmetry around where the euro can go is very much skewed to the downside. And one place that that could come from most easily is from a policy error by the ECB overtightening into a market that can't withstand it any more."