WSJ:WORLD FOREX:Euro Flat After Overnight Plunge, Further Losses Eyed
-- Euro flat vs dollar in Asia after overnight tumble to one-year low
-- Traders say euro looks set to fall further, dip below $1.300 "a matter of time"
-- Euro may fall below Y100
By Tatsuo Ito
Of DOW JONES NEWSWIRES
TOKYO -(Dow Jones)- The euro was mostly flat in static Asian trading Wednesday after tumbling overnight to its lowest level in nearly a year, but traders say the single currency looks set to slide further as there is no silver bullet for the euro zone's debt woes.
"It's a matter of time" before the euro falls through the $1.3000 mark, said Dai Sato, senior vice president of the foreign exchange division at Mizuho Corporate Bank. "The question is how much further the euro will fall below that."
Sato said the next target could be around $1.2860, the lowest level seen so far this year, set back in January.
"At the same time, there is a feeling the euro may find a near-term bottom amid fresh developments if European and U.S. stocks rebound, even though there is a risk of a sudden fall due to concerns over the possible downgrading of euro zone countries," he added.
At 0450 GMT, the euro was at $1.3034 from $1.3038 late Tuesday in New York, according to EBS. The common currency was at Y101.61 from Y101.64.
The euro took a hit overnight after German Chancellor Angela Merkel expressed her opposition to raising a EUR500 billion lending limit for the permanent euro-zone bailout fund, the European Stability Mechanism, which is due to come into operation in July 2012. "The comments contained no surprises, but came at a bad time," Mizuho's Sato added.
Traders said euro bear sentiment could persist unless Germany and the European Central Bank step up their contributions to efforts to put an end to the crisis. "But such changes are unlikely to occur soon," Sato said.
The euro will likely come under pressure against the yen, said Junya Tanase, chief currency strategist at JPMorgan in Tokyo, adding that "there's a chance it may fall below Y100."
In October, the euro fell to a 10-year low against the yen of Y100.77.
Barclays Capital's chief Japan currency strategist, Masafumi Yamamoto, said the euro could fall to as low as $1.2000 while the euro may fall to Y96.0 over the next year as investor concerns over European debt problems continue.
Traders will keep a close eye on an Italian bond auction later in the day, as well as EU industrial production data for October. The dollar was at Y77.96 against Y78.01 and at CHF0.9455 from CHF0.9460. The U.K. pound was at $1.5485 from $1.5480. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 80.267 from about 80.293 in late New York on Tuesday.
Interbank Foreign Exchange Rates At 2350 EST / 0450 GMT
