The euro held steady versus the dollar on Thursday, hovering near a two-week low, as violent protests against austerity measures in Spain and Greece highlighted the challenges facing highly-indebted euro zone countries. The single currency held steady at $1.2876, not far from a two-week low of $1.2835 set the previous day.
The euro has support at the 200-day moving average near $1.2826, with additional support seen roughly around $1.2740, the 38.2 percent retracement of the July to September rally. Spain's reluctance to request a bailout and trigger the European Central Bank's new bond-buying programme has weighed on the euro, which came under pressure on Wednesday as Spanish 10-year bond yields again topped 6 percent.
"In this environment, unless there is news of a Spanish bailout, I think the momentum is for a weaker euro," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong. Still, investors were wary of getting too bearish on the euro since sentiment could shift if Spain were to ask for aid. As well, nobody wanted to stock up on the US dollar as the Federal Reserve is running its own stimulus programme.
That confluence of factors saw the common currency down just around 2.2 percent from a peak of $1.3173 set on September 17, only a small correction that could yet turn full-scale if sentiment continued to sour, traders warned. The euro's woes helped keep the safe haven yen on firm footing.
The euro eased 0.1 percent versus the yen to 99.99 yen, having hit a two-week low of 99.71 yen the previous day. The dollar dipped 0.1 percent to 77.66 yen, inching back in the direction of a seven-month low of 77.13 yen hit on September 13, the day the Fed announced its new round of aggressive monetary stimulus.
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