Euro falls in Asia

The euro edged lower on Thursday, hurt by jitters over Greece's plan for a referendum on the eurozone debt deal, with market players seeing the risk of more downside in the next couple of months. The euro retreated as attention shifted back to Greece after the US Federal Reserve offered no new stimulus on Wednesday, saying it was mulling the possibility of buying more mortgage debt to spur a struggling recovery.
The single currency fell 0.3 percent to $1.3713. The euro dipped to as low as $1.3665 earlier, nearing a three-week low of $1.3608 hit this week. One possible support lies at $1.3566, the 61.8 percent retracement of its October rally. "We're negative on the euro. There are very few scenarios in my mind where the euro can rally significantly," said Adarsh Sinha, Asia-Pacific G10 FX strategist at Bank of America Merrill Lynch in Hong Kong.
Sinha said positive scenarios, such as European officials and the International Monetary Fund agreeing to unconditionally fund Greece while it sorts out its domestic politics, are very unlikely. Indeed, German Chancellor Angela Merkel and French President Nicolas Sarkozy told Greece on Wednesday it would not receive another cent in European aid until it decides whether it wants to stay in the eurozone.
"Our central scenario is the euro moves towards $1.30 by year-end," said Bank of America Merrill Lynch's Sinha, adding that the euro could drop further if there is an extreme outcome, such as a disorderly default of Greek debt. Adding to the market's risk-off tone in Thursday's Asian trade, the Australia dollar fell 0.9 percent to $1.0254, its drop exacerbated by selling by options players.
Traders said low market liquidity likely helped to exaggerate the moves in the Australian dollar and the euro, with Tokyo players away for a Japanese public holiday on Thursday. The dollar was stuck in a narrow range against the yen, holding steady at 78.01 yen. The focus is on whether Japan will intervene if the yen starts heading higher again after Tokyo's massive yen-selling on Monday, estimated at a record 7.7 trillion yen.