TOKYO: The euro held its ground in Asian trade on Wednesday after getting a boost on rising expectations that Spain will seek a bailout and Moody's decision not to downgrade Madrid's credit rating.
The 17-nation currency bought $1.3099 and 103.25 yen in Tokyo morning trade, from $1.3096 and 103.31 yen in New York late Tuesday.
The dollar edged down to 78.80 yen from 78.89 yen.
Ratings agency Moody's offered critical breathing room Tuesday for Spain to fix its fiscal woes, holding the nation's debt rating unchanged at Baa3, one notch above "junk" grade, although a negative outlook means a downgrade could still be in the offing.
"It was a factor we've been worried about since June, so with this news, it's likely that optimism toward the debt problem outlook will spread fast," said a senior dealer at a major bank in Tokyo.
Rising speculation that Spain will formally seek a bailout also supported the euro, as European Union leaders get set for summit talks on Thursday and hopes of ending the year with a deal on a stronger economic and monetary union.
An uptick in US retail sales in September and data showing US home builders' confidence was at its strongest in about six years helped the dollar.
Citibank Japan chief currency strategist Osamu Takashima said the greenback could be on its way to the 82 yen level if it managed to test 79 yen in Wednesday's session.
"We are now at an important watershed whether the dollar continues its downturn from March or not," he told Dow Jones Newswires.
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