WASHINGTON: The euro weakened against the dollar Monday, losing a bounce from a weekend bailout deal for Spanish banks as investors grew skeptical about the program.
The euro fetched $1.2482 around 2100 GMT, down from $1.2514 at the same time Friday.
In early Asian trading, the single European currency had hit $1.2671, its highest level in two and a half weeks, before tumbling on worries about the implications of Spain's pending banking rescue from the European Union.
The euro also fell against the Japanese currency, to 99.13 yen from 99.49 Friday, while the dollar slipped slightly, to 79.43 yen from 79.49 yen.
"The intraday reversal in the EUR/USD and eventually in stocks reflects the market's skepticism about the Spanish bond deal being the solution to all of Europe's problems," said Kathy Lien at GFT.
On Saturday, Spain accepted a 100 billion euro ($125 billion) bailout deal for its ailing banks, the biggest eurozone economy by far to seek a rescue after Greece, Ireland and Portugal turned to the EU and International Monetary Fund for lifelines.
Kathleen Brooks at Forex.com said "the markets haven't perceived the bailout as a way to reduce credit risk in the periphery" of the eurozone. She noted investors were concerned their claims may be lower down the pecking order in the event of a Spanish default.
Lien emphasized that Spain's bailout "does not remove the risk of Greece or any other country leaving the eurozone. The Greek elections are scheduled for this weekend and it will be a close one."
Lien said the euro will have a tough time rallying against the dollar "as long as Spanish and Italian bond yields continue to rise and there is a risk of a country leaving the eurozone."
The dollar firmed to 0.9621 Swiss francs from 0.9596 francs late Friday.
But the greenback weakened against the British pound, which traded at $1.5484 compared with $1.5468.
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