Euro finds strength

LONDON, Sept 25 (Reuters): The euro inched higher on Tuesday despite a European Central Bank official playing down its president Mario Draghi's comments a day earlier about "relatively vigorous" inflation.

The dollar held steady in generally quiet European trading before the US Federal Reserve's two-day policy meeting begins later on Tuesday.

The euro had hit a 3-1/2 month high on Monday after Draghi expressed confidence in euro zone inflation and wage growth, before giving up most of those gains.

The ECB's chief economist Peter Praet said on Tuesday there was nothing new in Draghi's comments, but the single currency managed to find strength.

Most analysts have interpreted Draghi's speech as hawkish - euro zone money markets brought forward their expectations for a 10 basis point ECB rate hike to September from October 2019 - helping to underpin the single currency.