Euro on firm footing in Asia

The Swiss franc held near two-week highs on Friday, having powered higher on mounting Middle East tensions, while the US dollar lost steam, putting its rebound this month from a three-month low at risk. The Swiss currency, traditionally sought in times of heightened geopolitical tension, stayed near two-week highs versus the dollar and euro as unrest spread across the Middle East and North Africa.
Anti-government protesters from Bahrain to Iran were hoping to emulate those who toppled veteran leaders in Egypt and Tunisia. The dollar stood at 0.9505 francs, having fallen as low as 0.9474 francs on Thursday, its lowest in about two weeks, while the euro fetched 1.2922 francs, having plumbed 1.2890 francs on Thursday, also a two-week low.
The dollar was also broadly weaker against a basket of major currencies as US bond yields declined slightly and expectations of a Federal Reserve rate hike failed to gain momentum. A surprisingly large increase in initial jobless claims signalled wages were unlikely to pick up any time soon, reducing expectations of a rate hike by the Federal Reserve this year.
The dollar index, which tracks the greenback's performance against a basket of major currencies, dipped to a one-week low of 77.921 before edging back to 78.001. It has broken below a channel support line connecting its three-month low on February 2 and lows on February 9-10, suggesting its recovery from the February 2. low is at risk.
Immediate support comes in at 77.88, the 50 percent retracement of the February 2 to February 14 rise, a break of which could open the way for a test of the February 2. low of 76.881. "As long as the dollar index holds above the February 2. low, it will be in a holding pattern," said Ayako Sera, market strategist at Sumitomo Trust and Banking, adding that the dollar's fate hinges on Fed policy in the long run.
The Fed's chief, Ben Bernanke, will be speaking in Paris at 1300 GMT on Friday ahead of a meeting of G20 finance ministers and central bankers on Friday and Saturday. Traders expect little from the G20 meeting. "I don't think the upcoming G20 meeting will produce many market-moving factors, so currencies are expected to stay in current ranges," said Masanari Takada, foreign exchange strategist at Nomura Securities.
The euro touched a one-week high of $1.3629. "You could attribute some of the euro's gains to lower US yields," said a trader at a Japanese bank, "But objectively speaking, it's difficult to justify the euro's spike as there aren't too many supportive factors for the currency at the moment. Some players were squaring positions ahead of the US three-day weekend," he added. The dollar also lost momentum against the yen. The greenback traded at 83.35 yen, having fallen to 83.15 on Thursday, well off an eight-week high near 84 yen hit on Wednesday.