* Euro down after best week against dollar since 2011
* Dollar bulls cautious after dovish steer from Fed last week
* ECB president’s speech, Greece in focus
By Anirban Nag
LONDON, March 23 (Reuters) – The euro fell on Monday, unable to build on its best weekly performance since late 2011 versus the dollar, on concerns about whether Greece can reach agreement with creditors to secure fresh funds.
European Central Bank President Mario Draghi was due to address a European Parliament committee, with Greece and the progress of the ECB’s quantitative easing programme, which has pushed the euro lower recently, high on the agenda.
Greek Prime Minister Alexis Tsipras’ meeting with Chancellor Angela Merkel on his first official visit to Berlin will also be in focus. At a European Union summit on Friday, Merkel said Greece would only receive fresh funds to ease a cash crunch once creditors approve a comprehensive list of reforms Athens has promised but yet to produce.
With officials in Brussels, Berlin and the ECB now acknowledging the risk that Greece could leave the euro zone, this meeting will be closely watched for signs of a breakthrough or hardening of positions.
After rising last week as the dollar was hit by comments from the U.S. Federal Reserve, the euro was down 0.4 percent at $ 1.0785 in early European trade on selling by long-term investors.
The euro’s losses against the dollar, helped the dollar index rise 0.25 percent to 98.159.
“Concerns about Greece are keeping investors cautious about the euro,” said Yujiro Goto, currency analyst at Nomura. “Investors have unwound some of their long dollar positions and they are putting them back. Medium term, euro/dollar depreciation is clear.”
Bets in favour of the U.S. dollar fell to a three-month low in the latest week, according to data from the Commodity Futures Trading Commission released on Friday. Net dollar longs fell below $ 40 billion for the first time in 12 weeks.
Speculators cut long positions in the dollar last week after markets pushed back expectations of a U.S. rate hike and after Fed Chair Janet Yellen said that the Fed “noted that export growth has weakened, probably the strong dollar is one reason for that.”
St Louis Federal Reserve President James Bullard said on Monday that the dollar index is not far from fair value but it is unclear how much more the U.S. currency will strengthen against the euro.
Morgan Stanley said in a note that the dollar is likely to remain soft especially if incoming data surprises on the downside.
“We recommend selling dollar/yen with a target of 115.50 and a stop at 121.20 yen,” they said. Dollar/yen was flat at 120.06 yen on Monday.
(Editing by Susan Fenton)
- European Parliament