TOKYO: The euro edged down in early Asian trade on Tuesday, creeping closer to an 11-month low hit last week after European Central Bank President Mario Draghi quashed hopes for more aggressive bond purchases that have helped control European yields.
The euro was at $1.3007, above an 11-month low of $1.2944 hit last week and a Monday session low of $1.2983 but well off Monday's high of $1.3044.
Resistance lies at $1.3090, which would be a 50 percent retracement of its recent move from $1.3236 to $1.2944.
Draghi told the European Parliament on Monday that the ECB's purchases of peripheral debt were temporary and "not infinite", disappointing investors who were hoping for further bond buying that would keep yields stable. He also said 2012 will be a difficult year for the euro zone's banks, and recovery in economic activity in the region is likely to be slow.
Following a three-hour conference call, European Union finance ministers said they agreed on Monday to boost IMF resources by 150 billion euros ($195 billion) to ward off the debt crisis and won support for more money from EU allies.
But the EU said those lenders must first win parliamentary approval and Britain made it clear it would not participate, raising doubts about whether the group will be able to reach its 200 billion euro target.
"Concerns about the European situation will keep the euro under pressure even if it manages short-term rises," said Sumino Kamei, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ.
Some investors believe the euro could receive a brief lift on short-covering in thin conditions ahead of the year-end. IMM data released on Friday showed net short positions in the euro against the dollar totalled 116,457 as of Dec. 13.
But with European leaders still trying to come up with measures to contain the region's debt crisis, any rise the euro has managed in recent weeks has been met with selling, and investors remain wary of further sovereign downgrades.
On Friday, Moody's cut its debt rating for Belgium by two notches to Aa3 from Aa1, and Fitch warned it could may downgrade France and six other euro zone countries as it believes a comprehensive solution to the region's debt crisis is "technically and politically beyond reach".
The dollar continued to receive safe-haven support after the death of North Korean leader Kim Jong-il raised questions about the leadership of the nuclear renegade state, though investors were seen unlikely to build new positions.
"Unless there is something new about the North Korean situation, Kim's death has already been factored in," Kamei said.
The dollar index was down slightly at 80.316, while the greenback was steady against the yen at around 78.00 yen .
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