The euro struggled near recent nine-month lows against the dollar today as investors focused on the prospects for lower interest rates in the euro zone.
Yesterday, the euro fell after monetary sources at the European Central Bank (ECB) said bank policymakers were considering a rate cut depending on how upcoming data play out but that
the bank's policy board was split on whether monetary easing would help the sluggish economy.
These comments came on the heels of European Union leaders' failure to adopt a seven-year budget and the rejection of the EU constitution by France and The Netherlands, forcing the single currency back towards nine-month lows hit near $1.2000.
Interest rates have become the dominant theme in the currency market this year, helping the dollar stage an unexpected rally and benefiting other currencies where rates are high or on the rise.
This means comments from monetary policy makers are closely watched for clues on future interest rates.
Earlier the euro traded 0.2 per cent down from late New York levels at $1.2120. It was slightly weaker at 132.56 yen while the dollar traded steady at 109.28 yen.
The Swedish crown fell sharply against both the dollar and the euro after the Riksbank cut interest rates by 50 basis points to a historic low of 1.5 per cent. Many analysts had expected a more moderate cut of 25 basis points.