Euro falls in New York

The euro fell on Wednesday, hurt by fears debt-ridden Portugal will require a bailout after its parliament rejected the minority government's austerity measures. The vote is likely to cause the government's collapse.
Prime Minister Jose Socrates has said he will resign if the plan fails to clear parliament and Portugal would probably be forced to seek foreign aid. Socrates is to meet President Anibal Cavaco Silva later Wednesday. The euro extended declines on the news and fell to a session low, although it recovered as investors debated how much of the news was already priced in.
Earlier, an International Monetary Fund spokeswoman said Portugal had not requested a loan program backed by the institution, dismissing speculation Lisbon was in talks with the fund. The euro was last down 0.6 percent at $1.4105 after hitting a low for the session of $1.4099, according to trading platform EBS. Dolan suggested euro/dollar would still test $1.44-45 in the short run.
Most investors are betting any losses in the single currency should be limited amid expectations of rising eurozone interest rates. The euro was already down from a 4-1/2-month high against the dollar, set in the previous session, ahead of the Portuguese vote, after failing to break through options barriers in the $1.4250 area. Analysts said the euro could dip below $1.40 in the short term before rising toward $1.4280, the November high.
Adding to bearish euro sentiment was a document showing European leaders would decide how to increase their bailout fund only in June, not this week. The yield on Irish government bonds soared to euro-lifetime highs on uncertainty over whether a European summit later this week will agree on an improvement of the terms on bailout loans. Sterling was last down 0.8 percent to $1.6242. It touched the day's low as Britain lowered its growth projections for the coming year and increased borrowing targets.
The dollar was down 0.1 percent against the yen at 80.85, with markets still wary of intervention by authorities to curb yen strength. A fall below the 80 to 80.50 area could see officials return to the market to sell the Japanese currency.