RTRS: Euro falls from six week high; second summit awaited
The euro slid from a six-week high against the dollar on Monday as uncertainty on euro zone agreement on a comprehensive plan to tackle the region's debt crisis prompted investors to reduce bullish bets.
The euro had gained in early trade after European leaders neared a deal over the weekend on bank recapitalization, and euro zone officials said France and Germany were close to agreement on how to use the European Financial Stability Facility to stave off bond market contagion.
Serious divisions still linger, however, over the size of the haircut private holders of Greek bonds will have to accept, with a final decision delayed until a second summit on Wednesday.
The dollar fell against the yen, trading close to a record low hit on Friday and leaving traders on alert for possible renewed currency intervention to stem strength in the Japanese currency.
"There was anticipation of something more (from the euro zone meeting), and certainly there is a wee bit of disappointment," said Dean Popplewell, chief FX strategist at OANDA in Toronto.
The euro was last down 0.2 percent at $1.3864. Traders said it lacked the momentum for gains toward $1.40, prompting short-term traders to reduce long euro positions.
Any delay in releasing a convincing plan from Wednesday's summit, or even a delay in a statement from leaders of the euro zone economies, could cause the euro to fall, analysts said.
"I wouldn't go long on the euro right now. Event risk is still to the downside for the euro because the market is already priced for EU leaders to come up with a fairly big plan," said Richard Falkenhall, currency strategist at SEB in Stockholm.
Falkenhall added that the euro could easily rise, however, to around $1.41 on a positive summit outcome.
Such an outcome could prompt speculators to cover short euro positions.
The euro stood well above its nine-month low plumbed earlier this month, and analysts said it was likely to stay supported at least until the conclusion of Wednesday's summit.
Traders cited bids between $1.3780 and $1.3810, which they said may cap falls, while the euro has support at the 100-week moving average around $1.3660.
However, resistance stands at the 200-week moving average around the pivotal $1.4000 level.
DOLLAR/YEN FOCUS
Against the yen, the dollar was down 0.2 percent at 76.07 yen, not far above Friday's all-time low of 75.78 yen on electronic trading platform EBS.
Japanese Finance Minister Jun Azumi said on Monday that Japan would take decisive action on excessive and speculative forex moves. He said that the greenback below 76 yen did not reflect economic fundamentals.
The growth-linked Australian dollar was up 0.3 percent at $1.0409, though it was off an earlier six-week high of $1.0425.
(Reporting by Nick Olivari; Editing by Padraic Cassidy)
