The euro hovered near a one-month high on Monday, bolstered by news that Greece may receive a vital slice of aid in July to avoid a default, and some traders said a widening gap between US and eurozone interest rates could push the euro up to $1.50 in coming weeks.
The single currency has jumped almost 4 percent in the past three weeks on hopes that Greece is close to securing billions of euros in aid. A new aid package may cost more than 100 billion euros ($144 billion), German news magazine Der Spiegel said in its latest issue to appear on Monday.
Despite no long-term solution in sight for the eurozone's debt crisis, the euro is seen rising ahead of the European Central Bank's policy meeting on Thursday, when the bank is expected to prepare markets for an interest rate hike in July. Such an outcome would widen rate differentials in the eurozone's favour.
"The view is almost universal that regardless of the situation in Greece the ECB will hike interest rates, and with the US possibly pondering more easing after a bout of weak data, the euro will be boosted by traders eyeing rate differentials," said a trader at a Japanese bank.
In early Asia trade on Monday the euro rose to a one-month high of $1.4659. It last stood at $1.4642, up 0.1 percent from Friday's close. The next major obstacle for the euro on charts is $1.4710 - the 76.4 percent retracement of its decline in May from $1.4940 to $1.3968 But given the negative sentiment building against the dollar, some analysts are targeting a move to $1.50 in coming weeks.
In contrast, the US dollar was stuck near a fresh one-month low hit against a basket of major currencies in early Asia trade, finding no support after disappointing jobs data bolstered expectations that US interest rates will stay low for longer. The Fed being on hold for longer could mean the dollar may be in for a renewed slide and serve as a carry trade funding currency, boosting commodities and precious metals anew while putting downward pressure on the greenback against emerging Asian currencies.
The dollar index dipped as low as 73.643 - a trough not seen since May 5 - after the closely watched non-farm payrolls report last Friday showed a sharp slowdown in job creation, pushing the unemployment rate up to 9.1 percent from 9.0 percent. Having skidded to a one-month low near 80.00 yen on Friday, the greenback stood at 80.22 after meeting strong offers from hedge funds at Monday's Asian session high around 80.40 yen, Japanese bank dealers said.
Many fund operators are looking for chance to sell the dollar around 80.50 yen, traders said, but investors are reluctant to offload too strongly as they see sizeable options-related bids lined up around 80 yen and near 79.50 yen. Commodity currencies also benefited from weakness in the greenback. The Australian dollar last traded up 0.2 percent at $1.0740, having risen to a 3-1/2 week high of $1.0775. Still, it was some way off a 29-year peak of $1.1012 set on May 2. The market is keeping a close eye on the Reserve Bank of Australia's interest rate meeting on Tuesday. Most economists polled by Reuters expect the central bank to keep rates unchanged at 4.75 percent for a seventh straight month.