* Euro touches fresh three-month lows vs USD after elections
* Draghi speech to take centre stage in quiet start to week
* U.S. and UK markets shut for public holidays
By Lisa Twaronite and Ian Chua
TOKYO/SYDNEY, May 26 The euro touched a fresh
three-month low against the dollar on Monday as investors
awaited comments from European Central Bank chief Mario Draghi
and digested weekend elections in which critics of the European
Union more than doubled their presence.
Liquidity was likely to be thin during the rest of the
global session, with UK markets shut for the Spring bank holiday
and U.S. markets closed for Memorial Day.
Eurosceptic nationalists scored stunning victories in
European Parliament elections in France, Britain and Greece on
Sunday, as voters registered discontent over immigration,
austerity and unemployment.
Draghi is scheduled to address ECB Forum in Portugal, the
first of what the central bank says will be an annual event
equivalent comparable to the U.S. Federal Reserve's annual
Jackson Hole retreat.
"It is hard to think that Draghi will say anything new or
surprising," said Masashi Murata, senior currency strategist at
Brown Brothers Harriman in Tokyo, though his speech will be
closely watched for any signals about the ECB's next steps.
"But still, the ECB will matter most to the euro's near-term
direction than any longer-term potential impact from the
elections," he added.
The euro has fallen more than 2 percent on the greenback
since May 5 against a backdrop of rising expectations that the
ECB will ease policy next month, which in turn increased wagers
on the common currency coming under pressure.
Commodity Futures Trading Commission published on Friday for
the week ended May 20 showed speculators raised their net short
positions in the euro to 9,220 contracts from 2,175 contracts
the previous week.
The common currency last traded at $1.3619, down
about 0.1 percent on the day. Early in the session, it briefly
dipped to $1.3615, a low not seen since mid-February. In the
near term, it is seen drifting between $1.3600, where large bids
are said to have been placed, and its 200-day moving average at
Against its Japanese counterpart, the euro slipped about 0.2
percent to 138.80 yen.
Traders said the policy outlook will continue to be a
negative factor for the euro rather than results of the weekend
"The reality is that these results - in France especially -
won't mean a whole lot in practise but optically it's an obvious
pretext for some pressure on euro and sterling," said Ray
Attrill, strategist at National Australia Bank in Sydney.
In another key European election, billionaire Petro
Poroshenko claimed Ukraine's presidency on Sunday and vowed to
end a conflict with pro-Russian rebels and align his country
With the euro on the back foot, the dollar index held
near a six-week peak of 80.443 set on Friday.
The Australian dollar was little changed at
$0.9237, having formed a base just above 92 U.S. cents after a
recent selloff that saw it fall from 94 cents.
Markets seemed to have come to the realisation that the
Reserve Bank of Australia will keep interest rates at a record
low 2.5 percent for the foreseeable future.
Against the yen, the greenback hit a fresh 1-1/2 week high
of 102.05 early in the session, and was last up slightly
at 101.92 yen.
The minutes of the Bank of Japan's April 30 policy meeting
released on Monday showed board member Takehiro Sato proposed
changing the central bank's assessment of prices to say that
risks are tilted somewhat to the downside. That underscored
scepticism within the BOJ board that Japan will be able to
emerge from deflation in a year's time.
On Saturday, BOJ Governor Haruhiko Kuroda repeated his view
that the world's third-largest economy is making steady progress
toward meeting the central bank's 2 percent price target.
He said the bank still has policy options left to ease
monetary policy further to fend off risks that may threaten the
achievement of its price target.
(Editing by Shri Navaratnam and Eric Meijer)