TOKYO: The euro eased slightly in Asia on Thursday as positive sentiment sparked by this week's bailout agreement for Greece gave way to caution, on fears over Athens' ability to carry out much-needed cuts.
Adding to traders fears was Fitch's announcement that it expected Greece to default on its debt repayments while cutting its debt rating even further.
The common currency was trading at $1.3244 and 106.30 yen in Tokyo morning trade, down from $1.3252 and 106.41 late Wednesday in New York.
The European unit jumped more than a US cent Tuesday morning within minutes of the announcement that eurozone leaders had approved a 237-billion-euro rescue for Greece, before it eased back over the course of the day.
Fitch said it was "highly likely" Greece would default on its debts and cut its long-term sovereign debt rating by two notches from "CCC" to "C", which meant it was now at the bottom of the speculative grades and just one step above formal default.
In addition, eurozone private sector activity fell back in February, after returning to growth in January, a survey showed, adding to concerns the region is flirting with recession.
The dollar held on to gains from the previous day, when it topped the 80 yen level for the first time in more than six months thanks to growing confidence in the US economy as well as last week's credit easing by the Bank of Japan.
The greenback stood at 80.26 yen in early Thursday trade, compared with 80.29 in New York.
Masafumi Yamamoto, chief forex strategist at Barclays Capital in Tokyo, said the softening of the dollar against the yen may signify a larger shift in trends for the pair.
Expectations that Japan may begin posting persistent current account deficits, along with the central bank's surprise credit easing and concerns over a sovereign downgrade have also weighed on the yen, Yamamoto told Dow Jones Newswires.
He added that signs of an improving US economy and a receding likelihood that the Fed will further ease monetary policy have also supported the dollar.
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