TOKYO–The euro clawed back ground in Asia on Tuesday after overnight declines as Germany tempered expectations that an upcoming European Union summit would deliver a solution to the region’s debt problems. The euro edged up to US$1.3779 and 105.84 yen in Tokyo trade from US$1.3734 and 105.51 yen in New York late Monday. The U.S. dollar stood at 76.81 yen, almost flat from 76.82 yen. “The currency market is likely to settle into a holding pattern ahead of the EU summit this coming weekend,” said Credit Agricole’s Daragh Maher in a research note.
“But it remains an environment in which we believe the risks for the euro are skewed to the downside.” The euro market reacted little after ratings agency Moody’s warned France Monday that it may place a negative outlook on its AAA credit rating in the coming months, saying the government’s financial strength “has weakened.” The euro’s downside was supported by position adjustments after falling overnight as Germany sought to dampen expectations for next Sunday’s EU summit in Brussels, dealers said.