TOKYO: The euro edged lower on Tuesday as traders moved to lock in profits from the unit's sharp overnight gains, but it was supported by stronger risk appetite on the back of healthier stock markets, said dealers.
The euro softened to $1.3634 and 104.56 yen in Tokyo trade from $1.3645 and 104.60 in New York late Monday. The dollar was flat at 76.67 yen.
Dai Sato, senior dealer at Mizuho Corporate Bank said recent "excessive pessimism" was receding on expectations of capital injections into European banks, following comments from the leaders of France and Germany.
French President Nicolas Sarkozy and German Chancellor Angela Merkel put on a united front after weekend talks in Berlin, and vowed a response to Europe's debt crisis within weeks.
"The Sarkozy-Merkel meeting gave rise to hope that recapitalising banks would help Europe get over the problem and as more healthy US jobs data spurred expectations for the US economy to achieve a soft landing," Sato said.
A key US labour market report Friday showed that the world's largest economy created a bigger-than-expected net 103,000 jobs in September, which along with the pledges out of the eurozone helped ease recent global recession worries.
After meeting with Merkel in Berlin, Sarkozy promised "lasting, global and quick responses before the end of the month" to the eurozone debt crisis that is threatening to engulf banks and core euro countries.
Supported by the market's regained risk appetite as Tokyo stocks staged robust gains, "the euro is unlikely to resume its downswing for now," Sato said.
"But risks remain over possible gaps among eurozone nations as they discuss details of bank recapitalisation plans," he added.
The Australian dollar fetched 99.79 US cents at 0130 GMT after edging above parity earlier in Asian trade for the first time since September 22.
The "Aussie" hit an overnight high of 100.15 US cents and was trading at 99.96 US cents by 2150 GMT.
The risk-based currency first breached parity in October last year and has rallied consistently near or above the US$1.00 mark, hitting a record of 110.81 US cents in July.
China's announcement that it would support its four largest banks through market volatility also game sentiment a boost in Asian markets, said dealers.
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