FOREX-Euro drifts off low but U.S. holiday saps momentum
* Euro off lows thanks to a bit of short squeeze
* Downtrend still intact as ECB Draghi reinforces policy speculation
* Another quiet session expected with no major data in Asia
By Ian Chua
SYDNEY, May 27 (Reuters) - The euro struggled to gain any momentum early in Asia on Tuesday after drifting off a three-month low against the dollar with public holidays in the United States and Britain all but ensuring an anaemic session overnight.
The common currency last stood at $1.3644, having slid as far as $1.3615 on Monday. Against the yen, it traded at 139.10, off a low of 138.73. Just last week, the euro hit a three-month trough of 138.15.
Traders said a squeeze in short euro positions had given the currency some support overnight but the moves were not significant and unlikely to break its downtrend.
"It's a sad reflection of the lack of volatility in FX markets that we now report 30 point moves as being newsworthy," said Sean Keane, a director of Triple T Consulting and formerly a markets trader at Credit Suisse.
Markets have so far showed little reaction to victories by Eurosceptic parties in European Parliament elections and news that Ukraine has launched air strikes against pro-Russian rebels.
Prospect of some policy action from the European Central Bank (ECB) at its June 5 meeting has been weighing on the common currency in the past few weeks and comments from ECB chief Mario Draghi on Monday reinforced those expectations.
Draghi said the bank must be "particularly watchful" for any negative price spiral in the euro zone, adding "more pre-emptive action may be warranted" to guard against a drop in price expectations.
Reuters reported earlier this month that the ECB is preparing a package of policy options for its June meeting. It includes cuts in all its interest rates as well as targeted measures aimed at boosting lending to smaller firms.
The push back in the euro saw the dollar index give a bit of ground, retreating further from Friday's seven-week peak of 80.443. It was last at 80.285.
The greenback was steady on the yen at just under 102.00 and still near a 1-1/2 week high of 102.05 set on Monday.
Also in a holding pattern, the Australian dollar traded at $0.9245. It has been forming a trading range since finding good support just above 92 U.S. cents, following its recent fall from 94 cents.
A dearth of market-moving economic data out of Asia on Tuesday holds out the prospect of another dull trading session, leaving the focus on equities. In Europe, ECB's Draghi is scheduled to participate in an armchair discussion in the final day of the ECB forum.
(Editing by Shri Navaratnam)