Euro springs back in London

The euro held above an 11-month low against the dollar on Thursday but fell against the yen, with investors mindful of the eurozone debt crisis and a likely recession in the region looking to sell on any upticks. The single currency fell against the Swiss franc after the Swiss National Bank kept its floor on the euro/franc exchange rate unchanged at 1.20 francs.
That disappointed some investors who had built long euro positions on expectations that the SNB would lift the floor to fight deflation in Switzerland. The common currency - which drew some comfort from a successful Spanish bond auction - fell to 1.2252, its weakest since the start of the month, before pulling back to around 1.2270, around 0.8 percent lower on the day.
The dollar traded roughly 1 percent lower against the franc at 0.9439 francs, near the day's low of 0.9404 hit after the SNB announcement. "Pressure will remain on the SNB to lift the floor given slowing growth in Switzerland and the euro zone's troubles," said Chris Turner, head of FX strategy at ING. "But right now, the market does not have the appetite to take on the SNB's peg at 1.20. So we expect euro/Swiss to hover around 1.20."
The euro was up 0.1 percent against the dollar at $1.3001, taking a breather from a massive sell-off earlier this week that saw it drop to $1.2945 on Wednesday, the lowest level since January 11, on trading platform EBS. The next major support is at the year's low, $1.2860, hit on January 10.
The single currency has lost about 3 percent against the dollar this week after last Friday's European Union summit, seen as crucial to reigning in the debt crisis, failed to come up with near-term solutions to restore investor confidence. The euro fell to a fresh two-month low against the safe-haven yen at 101.04 yen, not far from a 10-year low of 100.77 yen hit in October. The euro's weakness, plus falls in commodities such as gold and persistent strains in dollar funding markets, have helped lift the dollar index close to its 2011 high. The index was last down 0.2 percent at 80.360, as investors booked profits on long dollar positions.
The dollar eased 0.2 percent to 77.91 yen, having pulled away from last week's low near 77.13 yen over the past few days. Offers from option sellers and exporters are seen in the 78.15-30 area and are likely to cap gains in the dollar, traders said.