The euro edged up against the dollar today, recovering after recent losses but remained close to an eight-month low on concerns about the fiscal health of some euro zone countries.
Traders said investors were disappointed the weekend's Group of Seven meeting did not result in concrete action to tackle the sovereign debt issues of countries such as Greece, Portugal and Spain.
European ministers told their counterparts at a G7 meeting they would ensure Greece sticks to its budget-cutting plan, but analysts said more was needed to restore confidence the problems could not upset the global economic recovery.
The euro recovered a little today, however, as investor aversion to risk eased, with European equities up 0.7 per cent, rebounding from three-month lows the previous session and helped by stronger commodity prices.
Earlier this morning, the euro edged up 0.2 per cent on the day to $1.3694, more than a cent above an eight-month low of $1.3585 hit on trading platform EBS on Friday.
The currency has shed around 10 per cent from a 15-month high of $1.5145 hit in late November, as jitters about the fiscal problems in Greece spreading to Portugal and then to Spain intensified.
The US dollar also pushed lower, with the dollar index down 0.3 per cent at 80.170. However, it was not far from a high of 80.683 hit on Friday, its strongest since July 2009.
The Japanese yen also cut some of its earlier gains, which came as investors looked to buy the low-yielding currency as a safe-haven trade. The dollar rose 0.2 per cent at 89.45 yen and the euro was up 0.4 per cent at 122.53 yen.
The euro dropped as low as 120.70 yen on Friday, its weakest in about a year.
"Euro/dollar and some other riskier currencies are slightly higher, so perhaps we have a little bit of consolidation for now, but it is very much open. The market is looking for what kind of reassurances may come with regard to the euro zone deficit situation and any statements will continue to have an impact," said Johan Javeus, SEB currency analyst in Stockholm.
"The late rally in the US on Friday (in the euro and riskier assets) was partly on hopes that there would be more tangible suggestions from the G7 meeting for a solution, and in that sense the statement was a bit disappointing," he said.
Reuters