Euro Dips Below $1.30

The euro traded at a three-week low against the dollar and slipped below the psychologically significant $1.30 level as Greek confusion and bank-rating fears created a toxic mix for the currency. In early New York trade, the euro pared losses to $1.3015 from $1.3066 late Wednesday. It traded at ¥102.70 from ¥102.48. The dollar was at ¥78.91 from ¥78.43. The U.K. pound bought $1.5693 from $1.5692, while the dollar fetched 0.9270 Swiss franc from 0.9234 franc. The euro traded as low as $1.2983, and it was also close to the lowest level against the Australian dollar since the common currency's inception. The selloff started Wednesday after European finance ministers failed to come to an agreement about Greece's latest bailout package. A decision by Moody's Investors Service to place 114 European financial institutions on review for downgrade early Thursday threw fuel on the fire. The next finance ministers' meeting is scheduled for Monday, and investors are hoping to get some clarity about how the aid package will be administered. The euro traded as low as $1.2983, and it was also close to the lowest level against the Australian dollar since the common currency's inception. The selloff started Wednesday after European finance ministers failed to come to an agreement about Greece's latest bailout package. A decision by Moody's Investors Service to place 114 European financial institutions on review for downgrade early Thursday threw fuel on the fire. The next finance ministers' meeting is scheduled for Monday, and investors are hoping to get some clarity about how the aid package will be administered. "Failure to secure a deal at the Eurogroup meeting could unleash another wave of euro selling, given markets are taking a dim view of Greece entering election season without funding," analysts at ING Bank NV wrote in a note to clients. The confusion centers on whether the country will get its €130 billion ($169.86 billion) loan tranche before its March 20 bond redemption payment becomes due, or whether European creditors will extend a bridging loan to the country and hand over the rest of the money after the country's elections in April. Thursday, the Dutch finance minister said delays can't be excluded. "I'm fairly confident that [the euro] will go lower from here. There might be a blip when we get a package announced, but that's definitely my sense," said Neil Mellor, a currency strategist at the Bank of New York Mellon in London. Like many other analysts, Mr. Mellor pointed out that $1.26—the year's low—is widely seen as euro bears' next big target. Still, some market watchers are reluctant to punish the euro much more from here. "We are in the lower end of the last five- to six-week range, but I would be reluctant to add to short positions at these levels," said Ankita Dudani, a currency strategist at the Royal Bank of Scotland in London. Thursday's selloff stabilized after Spain successfully auctioned around €4 billion of bonds and as Greek officials expressed confidence that there won't be any delays in the aid process. But U.S. traders could easily hammer the common currency further from current levels. Meanwhile, the Swedish central bank cut its key interest rate to 1.5% from 1.75%, as it sought to protect the Swedish economy from spillover effects stemming from the euro-zone crisis. The move dented the Swedish krona a little, and offered a reminder of the huge threats posed by the euro crisis to the currency bloc's neighbors. Emerging-market currencies adopted a softer tone in line with the euro, with the Czech koruna, the Hungarian forint and the Polish zloty coming under pressure against the single currency From: Wallstreet journal