Dollar off highs vs. euro but remains well supported

Shutterstock photo - The dollar eased back from four-month highs against the euro on Thursday following comments by Italy's economy minister, but concerns over financial instability in the euro zone continued to underpin safe haven demand.

During European late morning trade, the dollar pulled away from four-month highs against the euro, with EUR/USD rising 0.17% to 1.2801, up from session lows of 1.2755.

The euro found support after Italian Economy Minister Vittorio Grilli said he had no knowledge of an imminent downgrade of Italy's sovereign debt rating by Moody's.

The comments came amid speculation over a possible downgrade by Moody's after ratings agency Fitch cut Italy's rating earlier this month.

Meanwhile, talks in Italy aimed at forming a coalition continued amid growing doubts over whether a stable government can be formed.

Sentiment on the single currency remained fragile as banks in Cyprus prepared to open for the first time in almost two weeks with strict capital controls in place.

Cypriot banks have been closed since March 16 amid fears of a bank run while bailout talks were under way.

The dollar was lower against the broadly firmer yen, with USD/JPY down 0.24% to 94.23, but looked likely to remain supported as expectations for more aggressive easing measures by the Bank of Japan remained intact.

The dollar was almost unchanged against the pound, with GBP/USD dipping 0.02% to 1.5125.

Sterling hit session highs earlier after official data showed that U.K. service output rose 0.3% in January, the biggest rise since August, easing concerns over the threat of a triple-dip recession.

The dollar slipped lower against the Swiss franc, with USD/CHF losing 0.12% to trade at 0.9528.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD dipping 0.05% to 1.0156, AUD/USD falling 0.24% to 1.0417 and NZD/USD edging up 0.06% to 0.8373.

In New Zealand, official data showed that building consents rose 1.9% in February, after a 0.2% decline the previous month.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, slid 0.14% to 83.29.

The U.S. was to release revised data on fourth quarter growth, official data on initial jobless claims and a report on manufacturing activity in Chicago later in the trading day. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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