By William L. Watts & Myra P. Saefong, MarketWatch
LONDON (MarketWatch) -- The U.S. dollar on Monday was lower versus most major rivals and extended a small loss versus the euro amid signs that fiscally troubled Greece will find strong demand for its five-year syndicated bond issue.
The euro traded at $1.4172, up from $1.4139 late Friday. News reports said managers of Greece's sale of five-year bonds reported orders exceeded 5 billion euros ($7.1 billion). Greece had planned to sell 3 billion to 5 billion euros of bonds. Read about Greek bond demand.
The euro benefited from the "good reaction" to the offering, which has helped ease worries about Greece's fiscal woes, said Roberto Mialich, a currency strategist at UniCredit Bank in Milan.
The euro, however, needs to break through chart resistance in the $1.42 to $1.43 area to dent the market bias in favor of selling the single currency, he said.
The euro had traded above the $1.50 level as recently as early December, but tumbled partly due to worries about Greece's debt problems and fears of sovereign-debt problems elsewhere in the euro zone, analysts said.
The dollar index (DXY 78.26, +0.06, +0.07%) , which measures the greenback against a trade-weighted basket of six major counterparts, was at 78.129, down from 78.288 in late North American trading Friday.
"Much will depend on the key events in the U.S. this week, including the Fed [Federal Open Market Committee] meeting and the president's State of the Union speech," Mitul Kotecha, head of global forex strategy at Calyon, said in a research note Monday.
U.S. dollar bulls will "look for some indications that the U.S. government is serious about cutting the burgeoning budget deficit," he said.
Aside from the Fed, the other major central bank to meet this week is the Bank of Japan, Kotecha said. But unless the central bank is "seen to be serious about fighting deflation, USD/JPY may remain under downward pressure against the background of elevated risk aversion."
The dollar was slightly stronger against its Japanese counterpart, buying 90.18 yen, compared with 89.97 yen late Friday.
There appear to be plenty of dollar buyers below the 90 yen level -- suggesting that further upside for the yen will be limited, said Kotecha. He sees strong support around 88.84 yen.
For last week, the dollar gained about 2% versus the euro and 1% against a basket of currencies as investors turned away from riskier assets on concerns about Greece's financial problems as well as the likelihood of China trying to slow its economic growth. See Friday's currencies column.
"Concerns over Greece, China and Washington policy now seem to be converging and risk markets sold off further and faster last week," Tohru Sasaki, chief foreign-exchange strategist for Japan at J.P. Morgan Securities in Tokyo, said in a note to clients.
But on Friday, the U.S. dollar gave back some of its gains to fall below 90 yen, "with risk of slipping further should investor sentiment stay fragile," analysts at Credit Suisse wrote in a research note.
Any strength in the yen, however, may be "limited by the market fear of the possibility that the [Bank of Japan] announces another liquidity injection" when it meets Tuesday, Sasaki said. But "these policies are too indirect a form of policy to push [the yen] sustainably lower."
