Euro down in Asia

The euro inched lower against the dollar on Monday, taking a breather after last week's rally, with its upside seen capped ahead of major eurozone events in the next few weeks. While the euro could find support before US Federal Reserve Chairman Ben Bernanke's speech at an annual symposium in Jackson Hole, Wyoming on Friday, it may struggle to break above a recent seven-week high in the near term, analysts said.
"There's a lot of event risk, and I think this event risk will keep the euro capped," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong. He predicted the euro "will struggle to get above $1.26 this week."
The euro eased 0.1 percent to $1.2502 staying below a peak of $1.2590 set last Thursday on trading platform EBS, its highest level since July 4. Last week's rise came as traders trimmed bearish bets against the single currency. Expectations that the European Central Bank will soon take action to bring down Spanish and Italian bond yields helped bolster the euro.
It also gained ground versus the dollar after the minutes of the Fed's most recent policy meeting reignited speculation of more monetary stimulus. In addition to the ECB's next policy meeting in early September and a German Constitutional Court ruling on the euro zone's permanent bailout fund on September 12, analysts are focusing on whether international lenders will agree to give Greece additional time to meet its budget targets.
Underscoring the potential headwinds against the euro, Germany's Bundesbank has likened the ECB's bond-buying plans to a dangerous drug and a conservative ally of the German leader said Greece should leave the currency bloc by next year. "We're having the same old issues coming out on the headlines about Greece," said Andrew Robinson, FX analyst for Saxo Capital Markets in Singapore.
The euro has traded within an uptrend channel since hitting a two-year low of $1.2042 in late July, and this suggests that the single currency is likely to trade roughly between $1.2650 and $1.2400 for this week, Robinson said. The dollar index, which measures the dollar's value against a basket of currencies, last stood at 81.662, staying above a two-month low of 81.221 hit last week.
Against the yen, the dollar inched up 0.1 percent to around 78.74 yen. Germany's Ifo business climate index, the country's most influential indicator of economic health, is due later in the day. It is forecast to slip for a fourth month in a row, taking another hit from the euro zone crisis. A speech by ECB Executive Board member Joerg Asmussen later on Monday will also be closely watched for the central bank's latest thinking on the crisis, analysts said. "The EUR is likely to be more sensitive to such headlines than the German Ifo survey, and it will continue to remain vulnerable to headlines," analysts at BNP Paribas wrote in a note.