THE Australian dollar was trading in a tight range late yesterday after briefly dipping below parity with its US counterpart on Monday night.
As investors worry that a meeting of European leaders later this week will not solve an economic and debt crisis engulfing the eurozone, ANZ Bank strategists said they "remain comfortable selling the Australian dollar into rallies".
"Signs are yet to emerge that the global industrial cycle has bottomed, with a lack of clarity from the euro area," the bank said in a note.
German Chancellor Angela Merkel is blocking calls from other eurozone leaders for bailout plans that would cost German taxpayers more money, unless the arrangements impose more fiscal discipline within the eurozone.
That means the possibility of EU leaders providing a credible plan to resolve the debt crisis at tomorrow's summit is remote.
Ms Merkel said yesterday that the concept of jointly guaranteed eurozone bonds was "economically wrong and counterproductive".
At 5pm AEST, the dollar was trading at $US1.0024, down US0.08c from Monday's close.
Arab Bank treasury dealer David Scutt pegged support at US99.65c and resistance at $US1.0045.
Emma Lawson, a currency strategist at National Australia Bank, also said a move towards US99.6c was likely as trading began in Europe.
ForexCT head of research Steven Dooley said the local currency was likely to move lower ahead of tomorrow's EU summit.
"The Aussie dollar is definitely in a downward phase at the moment and that's why we fell below parity overnight," he said. "We think we'll wake up tomorrow morning and be back below parity."
Mr Dooley said markets were increasingly pessimistic about the prospect that the leaders' summit would see the continent adopt positive measures.
