LONDON: The euro fell to a near two-month low against a buoyant dollar on Monday on uncertainty over a Greek vote on reforms and before this week's US presidential election.
Greece's government will present the latest austerity package needed to secure international aid to parliament on Monday but will struggle to get it approved in a vote expected on Wednesday.
The euro fell 0.4 percent to $1.2778, breaking below a reported options barrier at $1.2800 and stop loss sell orders at $1.2780 to mark its lowest since Sept. 11. It was last at $1.2790 and traders said if Greece failed to pass the reforms package, the euro could drop to $1.2625/50.
Having broken below the 200-day moving average around $1.2836, chartists said the euro could face further losses, although it has near-term support at the Sept 11 low of $1.2753.
If the euro closes below the 200-day moving average it would be the first time since September and could signal a departure from its recent $1.28-$1.32 range.
Euro weakness helped the dollar to a two-month high against a basket of currencies. Uncertainty about the US election, in which incumbent Barack Obama and Republican Mitt Romney are neck and neck in the polls, encouraged safe-haven flows into the US currency.
"With the euro there is concern about what's going on in Greece, that they might not might not get the austerity vote through, and with the dollar the fiscal cliff is really getting some attention before the elections," said Arne Lohmann Rasmussen, head of currency research at Danske Bank, Copenhagen.
He said the dollar was also helped by Friday's better-than-expected US jobs data.
The dollar index hit 80.79, its highest since early September as it surpassed resistance at the 200-day moving average at 80.672.
With the Republicans seen retaining control of the House of Representatives, victory for Obama would be seen as raising the risk of policy paralysis over the 'fiscal cliff'.
If Congress cannot agree new arrangements, about $600 billion in government spending cuts and higher taxes will kick in early next year, all of which could hurt US economic growth and underpin safe-haven assets.
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