Euro gains in Asia

The euro gained on short-covering in volatile, commodity-driven trade after riskier assets bounced off intraday lows on Thursday, but was still on track to mark its worst quarter since early 2010, with traders preparing for further falls. On the day, the euro bobbed up 0.6 percent to a session peak of $1.3638, as stocks and commodities were scooped up on dips after an overnight sell-off, with the rally getting stuck in a layer of offers at $1.3620-40. Stop losses loom at $1.3650.
The euro has lost nearly 7 percent against the dollar this quarter, hammered by nagging worries over the prospect of Greek default and constant bickering by European policy-makers over the response to the crisis. This in turn has sparked jitters over contagion to Italy and Spain and fuelled fears about the sovereign debt exposure of European banks that have seen the euro slide 9 cents from above $1.45 at the end of June, prompting many to think the end of its decline has yet to be reached.
"It's very clear to me ... sell EUR/USD, it's going down," said a trader for a European bank in Singapore, citing the risk of debt restructuring by Greece and the possibility that the European Central Bank may cut interest rates. "My target is around $1.25 in EUR/USD in one month," he said.
The euro rose 0.4 percent against the yen to 104.12 yen, having bounced from a decade low of 101.90 yen earlier in the week. Tokyo exporters have been spotted selling in transactions related to the end of the quarter, but traders said the majority of them were likely settled by now.
Demand from Japanese retail players has been cited as supporting both the euro and the Australian dollar against the yen. The Aussie gained 0.3 percent to 74.90 yen. News that Finland voted in favour of expanding the powers of the eurozone bailout fund, agreed in July, is one step forward in helping combat the region's debt crisis, though the measure has to be approved by every parliament of the area.
The euro remains short of $1.3715, a key resistance level that is a 61.8 percent retracement of its decline to $1.3360 from $1.3937. Support looms at $1.3475-85, a 61.8 percent retracement of its advance to $1.3360 from $1.3690. The dollar index nudged 0.2 percent lower to 77.72, off an eight-month peak of 78.863 struck on Monday, with some analysts saying its recent safe-haven strength may be undermined by expectations of more easing by the Federal Reserve.
The greenback was steady against the yen at 76.52, not far from the record low of 75.94 hit in August. The yen has gained 5.7 percent so far this year. Risk currencies also gained, driven by the rebound in metals and commodities, with the Aussie advancing 0.6 percent to $0.9795.