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Dollar off lows vs. euro as Cyprus relief fades

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Investing.com - The dollar pared losses against the euro on Monday as ongoing concerns over the economic outlook for the euro zone offset relief over a bailout deal for Cyprus.

During European late morning trade, the dollar was fractionally lower against the euro, with EUR/USD edging up 0.05% to 1.3000, after touching session highs of 1.3048 earlier in the session.

The euro rose to a more than one-week high against the dollar earlier after euro zone finance ministers rubber stamped a EUR10 billion international bailout for Cyprus that will see the closure of the country's second largest lender Laiki Bank and inflict heavy losses deposits of more than EUR100,000.

The country's largest bank, Bank of Cyprus is to be restructured, with depositors there also taking a large haircut.

But the euro remained under pressure as investors remained wary amid concerns that the bailout deal could set a precedent for possible future bailouts in larger euro zone states with troubled financial sectors.

Meanwhile, concerns over the economic outlook for the euro zone and political uncertainty in Italy also continued to weigh.

The dollar gained ground against the yen, with USD/JPY rising 0.28% to 94.74.

The dollar looked likely to remain supported close to recent three-and-a-half year highs against the yen as expectations for more aggressive easing steps by the Bank of Japan under new Governor Haruhiko Kuroda remained intact ahead of the bank's upcoming policy meeting next week.

The dollar pulled back from one-month lows against the pound, with GBP/USD slipping 0.17% to 1.5203.

The dollar dipped against the Swiss franc, with USD/CHF inching down 0.03% to 0.9400.

The greenback was broadly lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD down 0.37% to 1.0190, AUD/USD rising 0.26% to 1.0472 and NZD/USD climbing 0.18% to 0.8367.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was unchanged at 82.52.

Investors were looking ahead to a speech by Federal Reserve Chairman Ben Bernanke later in the trading day.

Last week, the U.S. central bank announced that it will leave monetary policy unchanged in spite of recent signs that the U.S. economic recovery is deepening.

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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.

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