Euro falls to 3-month low as Cyprus lawmakers reject bank levy

The euro fell to a three-month low against the dollar as Cyprus’s parliament voted down an unprecedented bank-deposit levy, fueling speculation the nation’s bailout will falter.

The dollar strengthened vs. most of its 16 major counterparts as the Federal Reserve began a two-day meeting projected to maintain its monetary stimulus. The yen erased losses and rallied vs. all of its 16 most-traded person haven demand. The 17-nation currency is set for its longest run of declines against the Swiss franc in more than two years.

“There hasn’t been much movement in the euro as it was largely anticipated that the vote was going to fail,” said Greg Anderson, New York-based head of Group of 10 currency strategy at Citigroup Inc., said in a telephone interview. “The focus of the market over the last 24 hours has been on what’s plan B when the vote fails. The euro is on wobbly ground, but Europe was fortunate that coming into this crisis the market was pretty short of euros.”

The euro fell 0.6% to $1.2876 as of 2:43 p.m. in New York, touching the weakest since Nov. 22. The shared currency fell below its 200-day moving average at $1.2875. It dropped 0.4% to 1.2202 francs, set for a seven-day losing streak, the longest since December 2010.

Technical Levels

“The uncertainty regarding the vote is helping the market try to challenge a very key support at $1.2872, $1.2874 and $1.2876 which are absolutely key levels for euro-dollar.” Sebastien Galy, a foreign-exchange strategist in New York at Societe Generale SA, said in a telephone interview.

The yen added 0.2% to 95.04 per dollar and gained 0.8% to 122.37 vs. the euro.

New Zealand’s dollar fell for a second day vs. the U.S. currency as Finance Minister Bill English said in an interview that there may be a “correction in valuation” as the U.S. economy recovers. The so-called kiwi declined 0.4% to 82.36 U.S. cents.

The South African rand declined against most major counterparts, extending the worst slide among emerging-market currencies this year, on concern forced power blackouts by Eskom Holdings SOC Ltd. may hamper output. The currency slipped 1.2% to 9.2838 per dollar.

India’s rupee fell vs. the majority of its main peers after the central bank cut interest rates for the second time this year to bolster the weakest economic growth in a decade. It depreciated 0.4% to 54.3750 per dollar.

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