The euro held near 10-month lows against the dollar today on fiscal concerns after Portugal's debt was downgraded the previous day and with European leaders set to discuss aid for debt-stricken Greece.
Diplomatic efforts on the eve of the two-day European Union summit failed to bridge differences over whether to offer a safety net to Greece, with France and Germany discussing what role the International Monetary Fund might play and the form of any extra contributions by euro zone states.
Debt concerns in euro zone peripheral countries remained in focus after Fitch Ratings downgraded Portugal's sovereign debt on Wednesday, also weighing on the single currency.
"The EU leaders are unlikely to outline a detailed plan for Greece, which will likely keep the euro under pressure," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.
"A very bearish outlook for the euro will remain intact in the near term, where unsustainable fiscal positions are being punished."
The euro hit $1.3283 on trading platform EBS, its lowest since May 2009. By 08.36am, it was up 0.1 per cent on the day at $1.3327 as short-term players took profits on short positions, traders said.
During Asian hours, short-term players sold the euro and triggered stop-loss orders at $1.3300 after Chinese central bank deputy governor Zhu Min said the Greek debt crisis was just the beginning.
European Central Bank president Jean-Claude Trichet said the bank would extend its easier rules on collateral for its money market operations into 2011.
Against the Swiss franc, the single currency was down 0.1 per cent at 1.4267 francs, after touching a record low of around 1.4230 francs yesterday.
The dollar index, a gauge of the greenback's performance against six other major currencies, rose to 82.062, a 10-month high. It was last down slightly on the day at 81.780.
The dollar slipped 0.2 per cent to 91.95 yen but hovered near a 10-week high of 92.42 yen on trading platform EBS hit the previous day.
The pair broke above its 200-day moving average at around 91.55 yen, signalling further upward gains. Japanese exporter offers above 92 yen capped the upside, traders said.
A jump in US Treasury yields on Wednesday supported the greenback, while three-month dollar LIBOR rates stood more than 4 basis points above comparable yen LIBOR, having been nearly flat earlier this month.
Reuters