Euro holds steady

NEW YORK (CNNMoney.com) -- The dollar was little changed against the euro early Friday, but the shared currency was still on track to post its second consecutive weekly gain and is at a three-week high.

What prices are doing: The dollar edged up 0.1% against the euro to $1.2378, but was essentially unchanged on the British pound at $1.4827.

The greenback dropped 0.3% against the Japanese yen to ¥90.75.

What's moving the market: After touching a 4-year low early last week near $1.888, the euro has been gaining ground as fears that the European sovereign debt crisis will delay a global economic recovery continue to abate.

That sentiment has pushed the euro near a 3-week high.

Concerns about BP's (BP) ability to manage the costs of the Gulf of Mexico oil spill have also diminished and provided support for investor sentiment.

Earlier this week, the company canceled its dividend for the rest of the year and agreed to contribute $20 billion to an escrow account to cover damages and liabilities related to the spill.

What analysts are saying: "The general sentiment that has been driving the rally in the euro will continue to drive the market," said Neil Mellor, currency strategist at Bank of New York Mellon in London. "Uncertainties about BP have also dissipated and that market has taken heart in that."

But Mellor expects headwinds going forward will underpin the dollar.

"I'll be surprised if the euro goes much higher considering the underlying debt concerns in the region," he said. "The problems haven't changed much or gone away in the last few weeks, and things will only get worse with pretty hefty and draconian cuts in expenditures across the region."