By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) — The euro continued to decline against the U.S. dollar during Tokyo’s Tuesday afternoon trading as concerns about the spread of sovereign-debt troubles in Europe lingered, but the single currency still held its ground above the two-month low it touched a day earlier.
“Ireland’s bailout package has clearly failed to stem the rot in euro-zone markets and, if anything, it has focused attention on other countries in the periphery, especially Portugal but also spreading to Spain, Belgian and Italian government debt,” Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole, said in a note to clients.
European financial leaders on Sunday approved an €85 billion ($112.53 billion) aid package for debt-crisis-stricken Ireland. Read more about the bailout.
The euro (EURUSD 1.3111, -0.0012, -0.0914%) traded at $1.3106 in the East Asian afternoon Tuesday, down from $1.3121 in late North American trade Monday. The currency fell under $1.31 Monday to touch its lowest level since late September. See Monday’s currencies column.
The dollar index (DXY 80.81, -0.02, -0.03%) , a measure of the U.S. unit against a basket of major rivals, edged up to 80.810 from 80.797 on Monday.
“Euro-zone peripheral worries are set to keep the euro under pressure, with [the euro-dollar pair] continuing to be sold on rallies,” said Kotecha in emailed comments.
But “the outlook for the U.S. dollar is positive over the short term against the background of rising risk aversion and improving U.S. economic data,” he said.
Against the yen, the dollar (USDYEN 84.0200, -0.2400, -0.2848%) bought ¥84.03, down from ¥84.25 Monday. See more currency research tools.
“The downside for the yen appears limited in the short term, as rising risk aversion and a renewed narrowing in bond-yield differentials between the U.S. and Japan, suggest that there is little fuel for further [dollar-yen] upside,” said Kotecha.
