-- Euro-zone crisis has reached a point where all roads lead to euro weakness, Deutsche Bank says -- Euro to slide against dollar and, especially, yen, Deutsche Bank says -- Investor reluctance to hold euro-denominated assets to help drive trend By Alexandra Fletcher Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Deutsche Bank AG (DB) said Monday that it expects the euro to continue plummeting against the dollar and Japanese yen in the first half of 2012 because the euro-zone debt crisis has reached a point where all roads lead to euro weakness. The world's biggest foreign exchange-dealing bank by market share said it expects the single currency to fall to as low as $1.20 against the dollar and Y90 against the Japanese yen by the end of June. At 0932 GMT, the euro was trading at $1.2761 against the dollar, having hit a near 16- month low earlier in the day. Against the yen it was at Y98.15, close to a 12-year low. "It appears increasingly clear that any resolution (to the euro-zone debt crisis) will likely include the European Central Bank engaging in larger bond buying as well as additional monetary easing. While lower risk premia could help the euro in the short term, more dovish steps will likely overwhelm the euro to see it head lower," said Bilal Hafeez, Deutsche Bank's head of foreign exchange strategy, in an annual report to clients. Because of the possibility of the Federal Reserve engaging in similar measures to support the U.S. economy, Hafeez recommends investors sell the euro against both the yen and dollar because the Japanese currency benefits from higher inflation-adjusted interest rates as well as Japan's current account surplus. The Japanese authorities in 2011 intervened in the market several times to stem yen strength, buying up record amounts of foreign exchange in the process. The reluctance of investors to hold onto euro-denominated assets will likely drag on the single currency and support the yen in 2012, Hafeez said. "We expect the net portfolio-flow picture to turn negative as euro repatriation slows, while the foreign selling of euro-area investments picks up," he said. Japanese investors in particular were choosing to buy yen-denominated securities. Deutsche Bank said that close to 90% of Japanese outflows in the past year have been into yen-denominated bonds, boosting the value of the yen. "Such dynamics provide a specific driver for the euro against the yen to head lower," Hafeez adds. -By Alexandra Fletcher, Dow Jones Newswires; 44 20 7842 9462; alexandra.fletcher@dowjones.com; @djfxtrader

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