NEW YORK: The euro fell back against the dollar Monday, correcting after Friday's two-cent surge on the back of the new eurozone crisis pact.
At 2100 GMT the euro traded at $1.2582 down from $1.2654 late Friday, when it took a boost after a summit of eurozone leaders in Brussels agreed on stronger actions to reverse the spiralling crisis.
But traders doubts about what action the European Central Bank would take at its rate-setting meeting on Thursday fed selling of the euro.
"The single currency has pared a small portion of Friday's massive post-summit advance with further losses expected ahead of Thursday's ECB rate decision," said Michael Boutros of DailyFX.
Central bank watchers believe that at least a cut in interest rates and possibly a new round of liquidity measures will be needed to stop the initial market euphoria that greeted the outcome of the summit from evaporating.
"If the summit result encourages the ECB to step in with serious support for sovereign bond markets, it could be a smashing success," said Berenberg Bank chief economist Holger Schmieding.
"If instead the ECB holds back, the crisis could possibly escalate badly over the summer until the ECB finally relents," he argued.
The Japanese yen picked up ground after falling last week. The euro bought 100.05 yen, compared to 101.02 yen Friday. The dollar was at 79.50 yen compared to 79.83.
The British pound eased to $1.5692 from $1.5707; the dollar traded at 0.9545 Swiss francs, up from 0.9489 francs.
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