Euro steadies in Asia

The euro steadied on Thursday as most players stuck to the sidelines after a selloff the day before on a spike in Italian borrowing costs, but options positioning suggested more drops ahead as fears of global financial turmoil grip markets.
The euro licked the wounds it sustained on Wednesday in its worst one-day beating against the dollar in 15 months after yields on 10-year Italian bonds spiked above 7 percent, a level where the cost of financing a debt burden of more than 2 trillion euros is seen as unsustainable.
The euro held steady near a one-month low at $1.3540, with the previous session's high of $1.3860 a distant memory. It was likely to move towards a low of $1.3145 plumbed in early October, analysts said. Two major clearing houses raised the level of collateral needed for those holding Italian government debt. The move makes it more expensive for holders of Italian bonds to borrow against them and looks set to trigger a cycle in which rising yields fuel more fear and more selling.
That saw the euro pierce below the whole Ichimoku cloud on the daily charts in one day and its base, now at $1.3592, has become resistance. But with most players expecting further falls, support levels came into focus, with the most immediate one holding up well on Thursday around $1.3525 - an area that provided solid resistance when the euro climbed back up in a corrective short-covering rally from its early October low.
Against the yen, the euro dipped to a two-week low of 105.349 yen, still some distance away from the decade low of 100.77 yen hit in early October. Meanwhile, the Swiss franc fell broadly with traders citing buying in euro/Swissie by a US bank and a corporate name buying dollar/franc through a number of banks. The euro recouped some of Wednesday's losses versus the franc and last traded up 0.3 percent at 1.2344 francs, while the dollar briefly jumped to a 4-1/2-week high, last at 0.9122 francs. The sharp move lower in the single currency saw the dollar index rise to a one-month peak around 78.00. But the greenback lost some ground against the yen to 77.72 yen.