By Polya Lesova and Sarah Turner, MarketWatch
LONDON (MarketWatch) — The U.S. dollar fell sharply on Monday, while the euro gained after media reports gave investors hope that policy makers will be able to get a grip on Europe's debt crisis.
The dollar index DXY -0.80% , which measures the performance of the greenback against a basket of six major currencies, dropped to 78.973 from 79.688 in late North American trading on Friday.
The euro EURUSD +0.34% rose to $1.3357 against the greenback from $1.3224 in late trading on Friday.
Investors lately have flocked to the U.S. dollar for its perceived safe-haven qualities as Europe’s debt troubles have escalated. Italian bond yields have climbed to levels markets regard as unsustainable in the long term, while Hungary and Belgium saw credit-rating downgrades late last week.
However, weekend reports suggested a range of fresh developments could be in the cards for Europe.
Separate news reports said that European officials have agreed on how to leverage a key rescue fund, and that French and German officials were discussing deeper integration. Read more on European reports.
Meanwhile, the International Monetary Fund denied a report in Italy’s La Stampa that the IMF would offer up to €600 billion in aid to Italy.
An IMF spokesperson said in a statement: “There are no discussions with the Italian authorities on a program for IMF financing.“
The British pound GBPUSD +0.52% rose to $1.5555 from $1.5470 in late trading at the end of last week.
Against the Japanese yen USDJPY +0.16% the dollar bought ¥77.73, up from ¥77.405 on Friday.
A senior Japanese finance ministry official said Monday his nation could conduct further solo intervention in the foreign-exchange market and suggested that the yen is overvalued, according to a Dow Jones Newswires report.
The official also reportedly said there was “no reason that Japan should be regarded as a safe haven.” See report on Japanese comments on forex intervention.
Polya Lesova is chief of MarketWatch’s London bureau.
Sarah Turner is MarketWatch's bureau chief in Sydney.
