The euro teetered at a key technical level against the dollar on Monday, with a break of that support seen likely to deepen its decline as markets turn cautious ahead of a slew of events this week. Among them, fund-raising by Italy and Spain in the bond market will be closely watched, especially after Portuguese government bond yields recently jumped to euro-era highs, renewing worries about the funding costs of highly indebted eurozone countries.
The yen bounced back from a three-week low on buying by Japanese companies, though traders say it looks increasingly under pressure on charts. The euro slipped 0.1 percent from late US levels to $1.3526, struggling to recover above its 100-day moving average at $1.3542, although it managed to stay above a three-week low of $1.3497 hit late last week.
A break of $1.35, a level that's widely perceived to be pivotal, could quickly see a test of $1.3483, which represents a 38.2 percent retracement of its January 10-February 2 rally. The euro was not hindered by lingering worries over the fate of Egypt after President Hosni Mubarak was ousted.
There is also uncertainty over who will lead the European Central Bank after Bundesbank president Axel Weber - who had been seen as front-runner to succeed ECB President Jean-Claude Trichet - suddenly decided to leave his central banking job. Still, many market players see the euro as likely to find some support at $1.33 or above, With the euro on the back foot, the dollar was not far from its highest level in three weeks against a basket of six major currencies.
The dollar index stood at 78.347, compared with the high of 78.697 hit on Friday. Versus the yen, the greenback slipped 0.3 percent to 83.16 yen as Japanese exporters took advantage of its rise last week to a three-week high of 83.68 yen. Still, the Australian dollar failed to extend gains on data showing surprisingly strong growth in China's imports in January - which some market players took as an ominous sign that the currency's bull run may be exhausted.