The euro trimmed gains against a broadly weaker dollar and hit a record low against the safe-haven Swiss franc on Friday on persisting concerns about the economic health of some eurozone countries. The dollar stayed under pressure following weak US data on Thursday. Further numbers on Friday, including University of Michigan sentiment, could put more pressure on the currency, although traders said moves would be limited ahead of a long weekend in the UK and United States.
The combination of negative dollar sentiment and concerns about eurozone debt was expected to keep the euro in a range above $1.4000 but below last Friday's high around $1.4345. "Some in the market are looking to bet against the dollar on speculation that the Federal Reserve could restart quantitative easing after June, which should help the euro," said Roberto Mialich, currency strategist at Unicredit in Milan.
The Swiss franc, which also hit a record high versus the dollar, was seen continuing its climb as Switzerland's economic and fiscal health far outshines that of the eurozone average. Traders cited widening spreads between peripheral and core eurozone bond yields behind the euro's weakness, as well as concerns about banking sector health as Franco-Belgian group Dexia said it would take a large loss as it stepped up asset divestments.
The euro traded 0.7 percent higher on the day at $1.4231, retreating from $1.4278, a one-week high hit in earlier trade. Offers from Asian sovereign names above that level were seen capping the single currency's upside. Above that, the euro's 55-day moving average around $1.4320 may provide an obstacle, along with resistance around $1.4335 - the 38.2 percent retracement of its decline this month.
"The market is finding it fairly difficult to hold onto positions. If we're back in the ugly competitions between the euro and the dollar, both have fairly big negatives," said Jeremy Stretch, currency strategist at CIBC. Investors' unwillingness to get too excited about the euro was evident by its fall to a record low of 1.2167 Swiss francs on the EBS trading platform. Due to its safe-haven status, the franc often gains during times of uncertainty.
The dollar hit a record low of 0.8534 francs on EBS, and was last down 1 percent at 0.8572. The dollar hit a three-year low versus the New Zealand dollar after data on Thursday showed fresh signs of a slowdown in the US labour market and the second estimate of first quarter growth came in below forecasts.
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