LONDON, May 24 Reuters The euro rose to a onemonth high on Tuesday after European Central Bank President Christine Lagarde said interest rates in the euro zone will likely be in positive territory by the end of the third quarter.

Traders cut short bets on the single currency as Lagarde39;s comments combined with resilient business activity data boosted appetite for the euro, though gains were capped ahead of the release of minutes from the Federal Reserve39;s May policy meeting on Wednesday.

If she is correct in suggesting that rates will no longer be negative in Q3 that potentially means two rate rises over the course of the next 4 months and if you are looking for an economic argument for tightening policy, then today39;s European PMI numbers were certainly pretty robust, said Stuart Cole, chief macro strategist at Equiti Group in London.

The euro , which was the standout gainer on Monday after Lagarde indicated eightyears of negative euro zone interest rates will most likely be over by the end of summer, extended gains. 

The single currency was up 0.2 at 1.0707 after she said on Tuesday she saw the ECB39;s deposit rate at zero or slightly above by the end of September, implying an increase of at least 50 basis points from its current level. 

The euro fell to a January 2017 low at 1.0349 earlier this month but has since rebounded by 3.6 in seven trading sessions.

The single currency39;s gains pushed the dollar to a fresh onemonth low as a broad selloff in stock…