Tokyo - The euro edged near 9-month lows against the dollar on Monday as doubts intensified about whether policymakers in the euro zone will help debt-laden Greece, prompting investors to add to long positions in the greenback.
Activity in Asia remained generally slow with most regional markets closed for the Lunar New Year holidays.
But the euro continued to trade heavily ahead of a meeting of euro zone finance ministers on Monday and Tuesday, with expectations low for specific measures to bail out Greece.
"There is no sign of a quick fix on Greece's debt problem," said a senior trader for a Japanese bank.
"Although I personally feel tired of trading on this topic, the market still seems to want to chase the euro lower," the trader said.
Growth-linked currencies like the Australian and New Zealand dollars edged lower after China's move on Friday to hike bank reserves for the second time this year, which fuelled concerns that aggressive monetary tightening by China might slow a global economic recovery.
A lack of clarity on the debt restructuring of government-backed Dubai World also weighed on investor appetite for riskier assets..
The euro fell 0.2% to $1.3600, not far from Friday's low of $1.3532 on trading platform EBS, its weakest since May 2009.
Concern over how Athens will service its debt, and that Spain and Portugal may face similar debt problems has hammered the euro, which has fallen nearly 10% since late 2009.
The currency is now vulnerable to a test of $1.3483, a 61.8% retracement of the rally from below $1.25 in early March to the $1.5144 high in November.
Last week the European Commission and the European Central Bank (ECB) agreed to work together to monitor Greece, but leaders failed to come up with anything concrete. ECB President Jean-Claude Trichet said on Sunday that Greece must take extra measures to fix its budget deficit and scrutiny of its economic indicators must be heightened.
"Europe needs a liquidity fund with conditionality, but finance ministers there are unlikely to deliver one this week," JP Morgan said in a note.
"Positions have moved quickly from short US dollar to small long, but the policy environment is too murky to reverse dollar strength. We recommend stay long versus commodity currencies and Europe, but neutral on the yen."
Latest data from the Commodity Futures Trading Commission show currency speculators increased bets on the dollar to their highest since 2008, while net short euro positions rose to a record in the week to February 9.
The dollar index was a touch higher at 80.382, not far from a high of 80.748 struck late last week, which was its highest since July 2009.
The Aussie was slightly lower at $0.8878, and the kiwi was down 0.1% at $0.6972.
US markets are also shut for a holiday on Monday, but the week is packed with events, ranging from minutes from the last Federal Reserve meeting to consumer price data for January and housing starts.
The dollar rose 0.2% against the yen to ¥90.18 while the euro stood at ¥122.76, nearly flat on the day after choppy trade above an earlier low of ¥122.50.
Monday's data showed Japan's economy expanded at the fastest pace in two quarters in October-December as an export recovery spurred capital spending.
But the market largely ignored the figures because few economists expect growth to increase rapidly as falling wages and a large gap between supply and demand push down prices.
- Reuters