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Euro hits lowest since 2006

While Federal Reserve minutes on Wednesday will be parsed for clues on when the U.S. central bank will drop its pledge to keep interest rates low for a considerable time, central banks in Europe and Japan are pondering how and when to inject more stimulus.

The euro dived below $ 1.20, falling as low as $ 1.18605 in Asian trade. It recovered some ground but by 1109 GMT was again looking shaky at $ 1.1905, down 0.8 percent on the day. Against the yen, it hit a two-month low of 143.15 yen, down 1 percent on the day.

“Increasing expectation for the ECB to deliver quantitative easing on Jan. 22, combined with rising political concerns ahead of Greece’s general election (on Jan. 25) should maintain downward pressure on the euro,” BNP Paribas strategist Michael Sneyd said. “The bullish momentum on the dollar should persist.”

Sterling was down 0.5 percent at $ 1.5245, having fallen to a 17-month low of $ 1.5185 in Asian trading. The yen fared better, gaining 0.2 percent on the day at 120.26 yen per dollar.

Dealers in London said there was room for a pause in dollar strength, with some seeing strong support for the single currency around $ 1.1850.

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