May 23 (Bloomberg) -- The dollar traded near the highest in seven months against the euro and in five weeks against the yen on expectations a report this week will show the U.S. economy grew faster last quarter than first estimated.

The pace of U.S. economic growth and speculation the Federal Reserve will keep raising interest rates has helped push the dollar up against 12 of its 16 major counterparts this year. The euro may also lose support as polls show French voters will reject the European Union constitution in a referendum on May 29.

``Things have improved for the U.S. dollar,'' said Stephen Walters, chief economist in Sydney at JPMorgan Chase & Co. The economic report ``is going to be very positive for the dollar. The Federal Reserve has given no signal it's going to pause in raising rates.''

Against the euro, the dollar was at $1.2548 at 8:54 a.m. in Tokyo, from $1.2557 late on May 20 in New York, according to electronic currency-dealing system EBS. It was also at 108.23 yen, from 108.16. The dollar last week rose 0.6 percent against the euro and 0.8 percent versus the yen. It traded as high as $1.2536 per euro on May 20, the strongest since Nov. 20.

Fifty-nine percent of the 54 strategists, investors and traders polled on May 20 from Sydney to New York advised buying the dollar against the euro. Thirty-seven percent said the dollar will rise versus the yen, while 24 percent said it may drop.

U.S., German Economies

The economy probably expanded at a 3.6 percent annual rate from January through March, faster than the 3.1 percent pace reported last month, according to the median forecast of 60 economists in a Bloomberg News survey ahead of the Commerce Department's May 26 release.

By contrast, the ZEW Center for European Economic Research may report tomorrow that its index of German investor sentiment remained near the weakest in four months, while German business confidence probably held near a 19-month low in May, the Ifo institute will say on May 25, separate surveys indicated.

Support for the euro is also waning on concern voters will reject the EU constitution in referendums in France and the Netherlands on May 29 and June 1, respectively. Opposition in France is at 53 percent, according to a May 20 survey by polling company BVA. Twice as many Dutch say they will reject as those who will support it, a poll by TNS NIPO showed the same day.

A Merrill Lynch & Co. survey published May 17 showed 71 percent of fund managers predict a defeat would weaken the euro.

``A no vote in France would really hurt the euro,'' said Toru Umemoto, chief currency strategist in Tokyo at Barclays Plc. ``It would weigh on the euro for years to come.''

The euro may fall to $1.24 this week, he said.

To contact the reporter on this story: John Brinsley in Tokyo at jbrinsley@bloomberg.net

Last Updated: May 22, 2005 20:00 EDT