Meanwhile, the euro recovered most losses against the Swiss franc after tumbling to a nine-month low overnight when traders took advantage of thin liquidity to push it quickly through stops below 1.49 Swiss francs.
Gains in European and U.S. share markets .FTEU3 .SPX helped lift risk appetite and weighed on the safe-haven dollar, although analysts say the inverse relationship between stocks and the greenback has weakened recently.
“What we saw was some consolidation (in the dollar) overnight and that looks like it’s continuing into the U.S. session,” said Omer Esiner, senior market analyst at Travelex Global Business Payments in Washington.
“Keep in mind the dollar had a very impressive week last week, rising pretty much across the board, so it’s no surprise to see a little bit of consolidation,” he added.
In early trading, the euro was up 0.1 percent at $1.4358 EUR=,, but it stayed close to Friday’s low of $1.4262 on EBS, its weakest since Sept. 4.
The euro has fallen sharply from levels above $1.50 as recently as Dec. 4, pressured by concerns about the fiscal health of some countries on the euro zone periphery following recent rating agency downgrades on Greek debt.
The European Commission said on Monday the euro was overvalued and that its further appreciation could hit the more open economies in the euro zone. [ID:nBRQ009642]
The ICE Futures dollar index .DXY, which measures its performance against six other major currencies, dipped 0.2 percent to 77.657, though it was still not far from a more than three-month high of 78.141 hit on Friday.
Ahead of the year-end, the dollar has been supported as investors cut back on short dollar positions, though some traders said the U.S. currency’s gains could begin to slow as many of these positions have already been neutralized.
U.S. Commodity Futures Trading Commission data on Friday showed speculators cut bets against the dollar to their lowest in more than 10 months in the week ending Dec. 15. [IMM/FX]
Against the yen JPY=, the dollar traded at 90.70 yen, up 0.4 percent on the day.
The euro was steady at 1.4942 francs EURCHF=. It had earlier crashed through stops below 1.4900 francs to hit a nine-month low of 1.4826 on trading platform EBS.
Investors have been testing the resolve of the Swiss National Bank after it subtly altered its intervention stance earlier this month, saying it would act only to counter an “excessive” appreciation of the franc versus the euro.
But investors continued to worry about the chances of intervention. In earlier trade, the franc fell sharply against the dollar and the euro, with traders saying a large dollar/Swiss franc buy order by a commercial bank triggered unconfirmed talk of SNB action.
The SNB and Bank for International Settlements, which has acted for the SNB in the past, declined comment.
“Euro/Swiss has reached quite low levels and it could be an indication that the SNB is not targeting specific levels as such,” said Sverre Holbek, Danske Bank strategist in Copenhagen.
“This may allow the currency to slip a bit further than we’ve seen previously, but we still don’t think they are ready to abandon their intervention in the currency market just yet.”
The Australian dollar fell 0.7 percent against the U.S. dollar to $0.8852 AUD=, close to a 10-week low hit on Friday as market players continued to scale back expectations for how high Australian rates will rise next year.
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