TOKYO: The euro struggled at a one-year low against the dollar in Asia on Monday, ahead of a European Central Bank (ECB) meeting where policymakers will consider their next move in the face of weak eurozone inflation.
The European single currency slipped to $1.3119, its lowest level since September last year and down from $1.3139 in New York, although it ticked up to 136.77 yen from 136.67 yen in US trade.
The dollar fetched 104.17 yen, its strongest since January and up from 104.06 yen in New York on Friday.
Eurozone inflation eased to 0.3 percent in August, raising concerns the 18-nation bloc is about to tip into deflation.
The data has put pressure on the ECB to take fresh monetary easing steps at its policy meeting Thursday, a move that would tend to weaken the unit.
"Speculation for the ECB to consider more aggressive policy action this week has increased considerably after (bank chief Mario) Draghi indicated downside risks to long-term inflation expectations last week," Credit Agricole said.
Despite weak US personal spending data on Friday, the dollar pushed ahead as second-quarter economic growth figures came in strong, with traders looking ahead to key non-farm payroll figures at the end of this week.
Investors were also keeping a close eye on geopolitical developments, with concerns increasing that Russia and Ukraine are on a collision course.
"Geopolitical risk will likely continue to overshadow the market in the days ahead, especially given the one-week deadline set by the EU for Russia to scale back operations in Ukraine or face more sanctions," Credit Agricole said.
Markets were also keeping an eye on a two-day Bank of Japan policy meeting this week, after data on Friday showed the world's number three economy slowed markedly in July as consumer spending dropped and factory output ran out of steam.
The disappointing figures underscored concerns about the state of the country's recovery, and heap more pressure on the central to unleash further easing measures.
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