Euro stabilises in Asia

The euro held steady against the dollar on Friday and was on track for its biggest weekly gain in three months, having rallied on short-covering following its recent drop to a 17-month low. Market players said position unwinding might give the euro a further lift in the near-term, with one possible upside target at $1.3077, the single currency's high so far in January.
Greece's negotiations with creditors on a debt swap remain a major worry, but any positive news there could see investors continue to cut bearish positions in the single currency, analysts said. "If the Greek debt talks do break down, clearly that is going to be one of the risks" to the euro/dollar, said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.
"I suppose markets will look for any sign that the talks are progressing today to help to sustain the rally in euro," he added. The euro held steady at $1.2963, well above a 17-month low of $1.2624 hit late last week on trading platform EBS. The single currency has risen about 2.6 percent against the dollar so far this week, putting it on track for its biggest weekly percentage rise since October.
Against the yen, the euro was little changed near 100.00 yen , having rebounded since hitting an 11-year low of 97.04 yen on January 16. The euro clung to gains made the previous day after successful bond sales in Spain and France. Spain passed its biggest test of market sentiment on Thursday, selling more longer-term debt than hoped.
France's debt auction also drew strong demand, signalling that markets have largely shrugged off last week's salvo of euro zone rating downgrades from Standard & Poor's. A trader for a European bank said the euro might test $1.3000 in the near-term but have trouble breaking it in Asia, even as some investors trim short euro positions ahead of next week's Lunar New Year holidays. Traders warned that the euro was still in a downtrend, and only a break above the October low at $1.3145 would suggest an interim base has formed.
Market players still see downside risks to the euro in coming months, due to nagging concerns that the euro zone economy may slip into recession and limit progress toward fiscal consolidation in the region. The Australian dollar eased 0.1 percent to $1.0408, hovering near an 11-week high of $1.0450 hit earlier this week.
The dollar was stuck near a two-week low against a basket of currencies, in the wake of the euro's recent rally. The dollar index stood at 80.096, having dipped to 80.041 the previous day, its lowest level since January 4. Against the yen, the dollar held steady at 77.14 yen, hovering near the top end of its 76.30 yen to 77.342 yen range so far in January.