The euro was stable in Asian trade Tuesday after dipping overnight amid fears over a political stalemate in Greece and a ratings downgrade for two dozen Italian banks.
In Tokyo, the single currency stood at $1.2834 and 102.57 yen, slightly up from $1.2823 and 102.37 yen in New York Monday.
The dollar was at 79.93 yen, up slightly from 79.84 in New York.
“We expect the dollar against the yen to continue rising firmly within the 79.00-81.00 range,” Masafumi Yamamoto, chief forex strategist at Barclays Capital in Tokyo, told Dow Jones Newswires.
Dollar-yen trade has been moving in a narrow range, as traders increasingly view the pair as safe-haven currencies amid turmoil in Europe.
A continued stalemate in Greece over forming a new government has elevated worries over whether the nation will keep up with its massive bail-out programme or withdraw from the eurozone.
Greek President Carolos Papoulias has been holding last-ditch talks with party leaders, seeking to forge an emergency government and avoid the need for fresh elections next month.
A rise in Spanish bond yields and Moody’s downgrading of the credit ratings on 26 Italian banks added to worries about Europe’s fiscal woes.
Christopher Vecchio, currency analyst at DailyFX, said more delays in forming a Greek coalition government would weigh heavily on risk appetite.
“For the immediate future, we continue to look for the 1.2626 yearly low in the euro against the dollar, and a slew of weak growth data this week could accelerate the move lower,” he told Dow Jones Newswires.
Eurozone gross domestic product figures are due to be released Tuesday, with the data expected to confirm the region is mired in a recession, while a slip in European Union industrial output in March also soured sentiment.