The euro dipped on Wednesday, taking a break from its recent corrective rally made on hopes for a solution to the debt crisis, with fragile risk sentiment souring after the Slovak parliament rejected a plan to expand the eurozone rescue fund. But the euro and the Australian dollar managed to come off intraday lows after a rebound in Shanghai stocks on talk that the country's sovereign wealth fund has been supporting bank shares.
Tokyo exporters took the opportunity to sell the euro against the yen after the common currency had gained nearly 4 percent in the week, piling pressure on euro/dollar. Option barriers reported at 105 yen and $1.37 in the pairs also helped halt the recent rally. The euro last changed hands 0.2 percent lower at $1.3617, off an intraday trough of $1.3582.
Support is seen around $1.3520-25 - the 50 percent retracement of the $1.3346-1.3698 rally, while stop losses were cited around $1.3710. Against the yen, the euro was down 0.1 percent at 104.43, off a 10-year low hit last week at 100.77 yen. For the Australian currency, selling first emerged from Japanese life insurers in Aussie/yen, pushing it down 0.4 percent versus the greenback to last trade at $0.9919, above the strong technical support area of $0.9880-50.
Analysts stressed that euro price moves will likely be subdued before the details of a comprehensive strategy to fight the debt crisis are revealed at an EU summit on October 23. Banking and regulatory sources said on Tuesday that Europe's banks would have to achieve a significantly stronger capital position under a quick-fire regulatory health check and may need to raise some 100 billion euros ($137 billion).
The dollar index gained to 77.76 on the day, but was still some distance away from an 8-1/2 month peak of 79.838 set on October 4. Against the Japanese currency, the dollar was at 76.71, trading in an ever-tightening range. The danger of yen-weakening intervention by Japanese authorities has seen the dollar/yen pair stuck in a narrow band off a record low around 75.94 yen set in August.