The euro fell to fresh three-week lows against the dollar in Asia on Monday, while commodity currencies also came under pressure as worries about eurozone debt problems and weak US payrolls data hit appetite for riskier assets. Data last Friday showed US employment growth ground to a halt in August, while the European debt crisis continued to fester with Greece and its international lenders now at odds over whether it has met conditions for a new aid tranche.
The euro fell 0.3 percent to $1.4164, after briefly dropping to $1.41367, its lowest since August 11, with the next target seen at $1.4110, a 61.8 percent retracement of its rise in July-August. That helped drive the dollar index back to one-month highs. The euro faces a week packed with potential event risk, both political and legal, beginning with the German Federal Constitutional court ruling on Wednesday on suits claiming Berlin is breaking German law and European treaties by contributing to multi-billion euro bailouts of Greece, Ireland and Portugal.
There is growing speculation over whether the ECB would continue purchasing Italian debt, a strategy that has caused sharp divisions within the Frankfurt-based central bank ahead of the bank's policy meeting on Thursday. The ECB's intervention was launched on the understanding that Italy would rush through an austerity plan to regain market confidence but efforts by Prime Minister Silvio Berlusconi's embattled government to do this have been plagued by disputed figures, policy U-turns and cabinet rows.
While Greece appears likely to come close enough to the 90 percent threshold to declare the operation a success, some market players are worried after Greece and the troika of its international lenders interrupted talks on a new aid tranche late last week after disagreement over why Athens has fallen behind schedule in cutting its budget deficit.
Highlighting growing frustration in Germany, the eurozone's paymaster, over bailouts, Chancellor Angela Merkel's centre-right bloc suffered another stinging defeat on Sunday in a regional election.
The Australian dollar fell 0.5 percent to $1.0595, having broken through the 55-day moving average at $1.0628. It was well off last week's peak around $1.0765. Against the yen, the dollar held reasonably steady at 76.83, holding off a record low around 75.94 plumbed last month with markets still wary of Japanese intervention. US stocks slid 2 percent on Friday in the wake of the US jobs data as investors fretted more about the economic outlook rather than looking ahead to another round of Federal Reserve debt buying, known as quantitative easing (QE). Still, the outlook of another round of easing could harm the dollar if sovereign players continue to buy the euro on dips.
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