Euro slides broadly in London

The euro fell broadly in thin trade on Monday, testing an area of key support against the dollar on increased talk that Greece will be forced to restructure its debt and uncertainty over a bailout for Portugal. The euro fell to an 11-day low around $1.4274, down over one percent on the day, though traders expected further losses to be restricted by demand from central banks looking to recycle dollar proceeds.
The single currency's falls gathered pace after German government sources said they expected Greece will not make it through the summer without debt restructuring. "The market is clearly sceptical about Greece, plus there is uncertainty from the Finnish elections, but there is still a lot of sovereign demand for euros on pullbacks and it remains a buy on dips," said Gavin Friend, currency strategist at nabCapital. Earlier a Greek newspaper reported that Greece had told the IMF and the European Union earlier this month that it wants to restructure its debt, though it pared losses as a finance ministry source in Athens said the story was untrue.
Players are watching Portugal's progress towards a bailout closely after strong gains in a weekend election by an anti-euro party in Finland that has vowed to veto its rescue package. Analysts doubted the Finnish vote could do more than slow down a bailout but the result of the vote added to negative euro sentiment, encouraging investors to cut long euro positions.
Net euro long positions rose to their highest since December 2007 in the week to April 12, data from the Commodity and Futures Trading Commission (CFTC) showed. The euro was last at $1.4280. It has support in the $1.4270 area from a trendline drawn from the year's low in January and at its 21-day moving average at $1.4267 which it has held for the past two months.
Additional support was seen at $1.4263, the 23.6 percent retracement of the euro's February to April rally and $1.4104 the 38.2 percent retracement of the same move. Sovereign demand was reported down to $1.4250, while previous support at the April 6 high of $1.4350 was now seen as resistance. The euro fell more than 1 percent to its lowest in more than two weeks to around 118.25 yen, taking it below its 21-day moving average at 118.55.
Euro/yen fell below a cluster of support in the 119.20 yen to 119.30 yen area that coincides with some intraday lows hit earlier in April. A trader for a Japanese bank said the euro could drop towards 115 yen in the near term. The dollar also hit its lowest in more than two weeks around 82.63 yen. The euro's broad fall pushed the dollar index up 0.6 percent at 75.281. The euro's rise has stalled since it hit a 15-month high of $1.4521 on trading platform EBS last week, though market players expect it to be supported by prospects of another rise in eurozone interest rates.