Reuters: US Dollar Report: FOREX-Euro firmer but gains limited as Cyprus deal stings

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FOREX-Euro firmer but gains limited as Cyprus deal stings Mar 26th 2013, 07:03 Tue Mar 26, 2013 3:03am EDT * Euro edges up but still near 4-month low vs dollar * Risk appetite fades on worries over Cyprus deal fallout By Sophie Knight and Ian Chua TOKYO/SYDNEY, March 26 (Reuters) - The euro languished near four-month lows against the dollar on Tuesday, held back by fears that future euro zone bank rescues could impose a burden on depositors, while the yen struggled after Japan's central bank chief reaffirmed a commitment to bold easing. The common currency rose 0.2 percent to $1.2873 after having hit a low near $1.2829 on Monday, its lowest level since Nov. 22. On Monday, the euro tumbled after the head of the Eurogroup, Jeroen Dijsselbloem, said the rescue plan agreed for Cyprus will serve as a model for dealing with future banking crises. He later appeared to backtrack, saying Cyprus was a specific case with exceptional challenges. () "While these comments were partly retracted, markets have interpreted the message as an indication that private sector bail-ins will need to play a greater role in any future bail outs," said Vassili Serebriakov, strategist at BNP Paribas. The euro's sharp falls against the yen, sterling, Swiss franc and Australian dollar on Monday were exacerbated by speculation of a credit rating downgrade for Italy, which is struggling to form a government after an inconclusive election last month. On Tuesday, the euro saw lacklustre gains against the dollar and the yen. The single currency rose 0.2 percent to 121.29 yen , staying above Monday's one-month low of 120.08 yen. The dollar held steady at 94.20 yen, finding some support after the new Bank of Japan Governor, Haruhiko Kuroda, reaffirmed his commitment to bold monetary easing to achieve 2 percent inflation. The yen is still searching for fresh impetus to weaken after reaching a 3-1/2-year low of 96.71 against the dollar on March 12. A near-term focal point is the BOJ's next policy meeting on April 3-4. "Buying the yen, which has increased on concern about Europe, could accelerate on fears about Spain, lower yields on 10-year U.S. Treasuries, and of course if the BOJ disappoints next week," said Junya Tanase, chief FX strategist at JPMorgan Chase Bank in Tokyo.Å' Link this Share this Digg this Email Reprints

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