* Euro nurses losses after previous day's drop
* Dollar/yen hovers above 3-week low; down 0.5 pct for the
* Australian dollar slips back from 3-week high
(Updates prices, adds comments)
By Shinichi Saoshiro
TOKYO, May 9 The euro struggled to gain traction
on Friday after dovish comments from European Central Bank
President Mario Draghi the previous day sent the currency
tumbling from a 2-1/2 year high.
The single currency held steady at $1.3839, having
pulled back from a peak of $1.3995 set on Thursday on trading
platform EBS, the highest since October 2011.
Draghi said the euro's strength was "a serious concern" and
that the ECB bank might act to stem falling inflation at its
June meeting, signalling possible easing.
Before Draghi's comments, the single currency had surged
after the ECB on Thursday kept monetary policy unchanged as
While it has not drawn a line in the sand, traders say the
ECB, which has focused on the euro's strength in the past few
weeks, gets uneasy when the euro rises towards $1.40. A Reuters
poll on Wednesday showed most economists expect ECB action if
the euro hits $1.42.
"The focus going forward is what the ECB actually does in
June, with a rate cut and a negative deposit rate being the
expected course of action," said Shinichiro Kadota, chief Japan
FX strategist at Barclays in Tokyo.
"But rates are already low at 0.25 percent that even if the
ECB does lower it the impact will be limited, and this will not
be effective in curbing euro strength," Kadota said, adding that
expectations will quickly build towards next possible steps like
provision of liquidity and ultimately quantitative easing.
The dollar was little changed at 101.70 yen, still
not very far from a three-week low of 101.43 yen set on
For the week, the greenback is down 0.5 percent against the
yen, weighed down by persistently dovish comments from the
Federal Reserve and low U.S. Treasury yields.
"If you ask whether dollar/yen is going to head higher or
lower, I think downside risks are increasing," said Satoshi
Okagawa, senior global markets analyst for Sumitomo Mitsui
Banking Corporation in Singapore, adding that the greenback
could head gradually lower against the yen.
Simmering tensions in the Ukraine have also supported the
safe-haven yen currency and the market kept an eye on a May 11
Pro-Russian separatists voted unanimously on Thursday in
favour of holding a referendum on independence, defying calls by
Russian President Vladimir Putin to postpone the vote to open
the way for talks with the Kiev authorities.
The Australian dollar eased 0.1 percent to $0.9364,
edging away from a three-week high of $0.9395 hit on Thursday,
when it gained a lift from upbeat Australian and Chinese
(Additional reporting by Masayuki Kitano in Singapore; Editing
by Kim Coghill)