The euro fell versus the dollar, ending four days of gains, on speculation European nations’ reluctance to boost spending will extend the region’s recession. The 16-nation currency declined against nine of the 16 major currencies after European officials, speaking as the Group of 20 finance ministers met on the weekend, said they had spent enough money to combat the financial crisis and don’t want to blow out their budgets. The yen fell for a third day against the dollar as expectations of a Bank of Japan plan to buy government debt spurred investors to seek higher-yielding assets elsewhere. “The expectation for further monetary easing and the reluctance to expand fiscal spending will weigh on the euro,” said Satoru Ogasawara, foreign-exchange analyst and economist in Tokyo at Credit Suisse Group AG, the second-largest Swiss bank. “Such policies apply downward pressure on the European currency.” The euro weakened to $1.2891 as of 12:42 p.m. in Tokyo from $1.2928 late in New York on March 13. The European currency traded at 126.64 per yen from 126.65. Japan’s currency declined to 98.24 per dollar from 97.95. The South Korea won strengthened to 14.808 per yen from 15.164 at the end of last week. The New Zealand dollar traded at 51.49 yen from 51.50. ‘Huge Step’ German Chancellor Angela Merkel defended her government’s decision to hold off new economic stimulus spending to confront the global crisis, saying current investments should first be given a chance to work. Germany already committed 4.7 percent of its gross domestic product toward stanching the economic downturn for this year and next, Merkel said after meeting U.K. Prime Minister Gordon Brown in London on March 14. “If we want to increase the effectiveness of such a stimulus package, then we first have to implement it, so to speak, and not to begin speaking of the next measure when the first one isn’t through,” Merkel said. “That’s my position, and I think we’ve already taken a huge step.” Demand for the euro also waned on speculation the European Central Bank will continue cutting rates to combat the region’s recession. Investors maintained bets the European Central Bank will reduce interest rates at its next meeting on April 2. The yield on the three-month Euribor interest-rate futures due June was at 1.47 percent, from 1.61 percent a month ago, according to data compiled by Bloomberg. Bollinger Bands Technical charts used to predict price movements signal the euro may fall to $1.2730 this week, according to Commerzbank AG, German’s second-largest lender. “The euro was overbought last week and stepped closer to the upper limit of the Bollinger band on the back of speculation that stock gains would improve risk appetite, which is why the single currency is weakening today,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank. The euro strengthened to $1.2958 on March 13, crossing above the upper Bollinger band resistance level of $1.2952 on the euro’s daily chart. Bollinger bands are two standard deviations above and below the average price of a currency or a security over the past 20 days. Resistance is a level where sell orders may be clustered. Asian currencies were led higher by the South Korean won as regional shares rallied. The Korean currency extended its biggest weekly gain in three months on speculation the U.S. will boost the supply of dollars to emerging markets to ease the global financial crisis. Asian Currencies “Short-term, with the rally in equities continuing and the buying of Asian stocks picked up in recent days, that’s very positive for Asian currencies,” said Mitul Kotecha, head of global foreign-exchange strategy at Calyon, the investment- banking unit of French bank Credit Agricole SA. “I’m not exactly positive for the medium term. We’re still in a high risk-aversion environment.” The won gained 1.9 percent to 1,455 per dollar, according to Seoul Money Brokerage Services Ltd. That advance pared this year’s loss to 13 percent. The Dollar Index, which the ICE uses to track the U.S. currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, traded at 87.413 from 87.428 last week. The index touched 89.624 on March 4, the highest level since April 2006. The yen weakened against 12 of the 16 major currencies before the Bank of Japan’s policy board starts a two-day meeting tomorrow. “The yen is likely to be under weakening pressure amid speculation longer-dated yields will decline,” widening the gap between returns on Japanese government securities and those of other states and reducing the currency’s appeal, said Hideki Hayashi, an economist at Shinko Securities Co. in Tokyo. The difference in yields between 10-year U.S. and Japanese debt was at 1.58 percentage points, near the 1.73 percentage points reached on Feb. 27, the widest since November, according to data compiled by Bloomberg. The spread between 10-year Australian and Japanese debt widened to 3 percentage points today.

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