EU summit eyed Euro seen vulnerable after fall

EU summit eyed Euro seen vulnerable after fall; ; The euro found a steadier footing early in Asia on Thursday but was vulnerable to further declines with European Union leaders seen unlikely to come up with a common solution to tackle the region's sovereign debt crisis at a two-day summit.

Europe's debt woes came to the fore again on Wednesday after Moody's warned about downgrading Spain's credit rating, saying it was worried about the country's high debt funding needs. "As a result, we are seeing incipient euro inflows dry up once again," said Samarjit Shankar, strategist at BNY Mellon.

The euro's decline, coupled with more upbeat U.S. economic data, which helped drive benchmark 10-year Treasury yields to fresh seven-month highs at 3.565 percent, powered the dollar higher. The dollar index .DXY rose more than 1 percent overnight to above 80.00. It was last at 80.180.

Yet, the sharp rise overnight has only brought the dollar index toward the top-end of a wide range around 78.80-80.50 seen in the past few weeks as thin year-end conditions made for choppy moves.

The euro last traded at $1.3222, compared with $1.3231 late in New York on Wednesday and well off a three-week high near $1.3500 set on Tuesday.

EU leaders meet in Brussels on Thursday and Friday for their end-of-year summit, with efforts to overcome the region's year-long debt crisis at the heart of their agenda.

"We expect plenty of contradictory headlines. Hence, euro is now vulnerable to a renewed move lower with a break below initial support at $1.3170 likely to trigger a decline to recent lows in the $1.2970 area," BNP Paribas analysts wrote in a client note. "With continued pressure on peripheral spreads, today's Spanish bond auction will be important for sentiment."

Spain is scheduled to sell up to 3 billion euros of 2020 and 2025 bonds on Thursday. Against the yen, the dollar last traded at 84.25, not far off the high of 84.50 set overnight -- a level not seen since September 24.

A convincing break of the high could bring into sight post-intervention peaks near 86.00 yen set in September. Commodity currencies like the Australian dollar faded against the stronger dollar. The Aussie was last at $0.9870, well off one-month high of $1.0030 set earlier in the week. For the latest updates PRESS CTR + D or visit Stock Market news Today

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