Euro Retreats From Four-Month Dollar High


The euro fell against the dollar Tuesday, one day after reaching four-month highs versus the U.S. currency, and ahead of this week's key EU summit to further tackle the Eurozone debt crisis.

In late morning London deals, the shared Eurozone unit dropped to $1.3918 from $1.3971 in New York late on Monday.

Against the Japanese currency, the dollar grew to 82.47 Yen from 82.25 Yen Monday.

"There is no doubt that sentiment has cooled towards the single currency... as investors start to get cold feet above 1.4000 versus the dollar," said Kathleen Brooks, an analyst at trading group

"There is some unease about the upcoming EU leaders' summit... to find a solution to the sovereign debt crisis," she added.

The Euro had reached $1.4036 on Monday, the highest level since the start of November, as expectations of a rate hike by the European Central Bank (ECB) outweighed Moody's downgrading of Greece.

The Eurozone's debt woes resurfaced Monday after Moody's slashed Greece's credit rating by three notches from Ba1 to B1 and warned it could be downgraded further given the risks to the country's stabilization efforts.

It was particularly embarrassing for Athens, coming days before Friday's crucial Eurozone leaders' summit that will discuss plans for a permanent debt rescue system. Athens blasted Moody's move as "completely unjustified".

The euro has been underpinned in recent days by expectations the ECB will lift rates as early as April, dealers said.

The dollar was meanwhile winning support from a drop in crude oil prices, traders said.

Elsewhere on Tuesday, the yen rose on purchases by investors seeking safe-haven assets amid continuing turmoil in the Middle East and North Africa.

Sterling was mixed as British markets awaited the Bank of England's latest interest rate decision due Thursday. Analysts expect the BoE to keep its key lending rate at a record low 0.50 percent -- a level that has stood for two years.

In London on Tuesday, the Euro changed hands at $1.3918 against $1.3971 in New York late Monday, at 114.78 Yen (114.90), £0.8607 (0.8620) and 1.2980 Swiss francs (1.2941).

The dollar stood at 82.47 Yen (82.25) and 0.9327 Swiss francs (0.9263).

The pound was at $1.6169 (1.6201).

On the London Bullion Market, the price of gold slipped to $1,431.90 an ounce from $1,437.50 late Monday, when it also struck a record high $1,444.95 an ounce thanks to its status as a safe haven.