* Euro off lows thanks to a bit of short squeeze
* Downtrend still intact as ECB Draghi reinforces policy
* Another quiet session expected with no major data in Asia
By Ian Chua
SYDNEY, May 27 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
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
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
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)