The euro hit an all-time low against the Swiss franc and slipped versus the dollar on Monday as investors looked for more aggressive solutions from European leaders to the eurozone's debt problems. The single currency fell to around 1.2693 Swiss francs on EBS trading platform, its weakest since the euro's launch in 1999 with the Swiss currency helped by investors seeking safety, though trading was seasonally thin and illiquid.
The euro continued to smart from last week's five-notch Irish rating downgrade by Moody's, and analysts said it would continue to struggle until European officials clarify how they will address funding and liquidity problems of indebted countries. "The ratings change at the end of last week is still keeping the euro under selling pressure," said Carl Hammer, currency strategist at SEB in Stockholm. The euro slipped 0.1 percent against the dollar to $1.3160, having dropped as low as $1.3125 in earlier trade, its lowest since December 2.
The single currency also hit a record low against the Australian dollar around A$1.3243 as both the Australian and New Zealand dollars benefited from gains in equity and commodity prices. Debt problems facing the eurozone were also highlighted as the European Central Bank expressed "serious concerns" that Ireland's bailout package could affect the institution's liquidity operations in the eurozone.
Traders said demand for euros from Russian participants in early European trade had run into selling by Swiss names, while a US investment house was reported selling euros on behalf of a real money account. The euro stayed within a relatively tight range against the dollar, however, with technical support around $1.3100-1.3090, a retracement level and its 200-day moving average. Below that, there is also support at the late November low around $1.2964. Traders said activity was dwindling ahead of holidays at the end of the week in many financial centres.
"The euro will struggle to sustain rallies, but it is hard to see any real directionality until the new year," said Elsa Lignos, currency strategist at RBC. The latest FX positioning data showed speculators continued to hold a net short position in the euro last week, although net shorts were trimmed from the previous week, while net longs in the Swiss franc increased.
The dollar index was steady at 80.374, having been underpinned in Asia on safe haven flows due to tensions on the Korean peninsula as South Korea held live-fire drills in a disputed area on Monday. The dollar eased 0.25 percent against the yen to 83.75 on Japanese corporate selling, slipping further below last week's three-month high of 84.51 yen.