EU session review: Euro weakens on debt crisis concern as finance ministers prepare to meet

The euro fell against the dollar, snapping a five-day gain, on concern the region’s debt crisis will worsen even as European finance ministers meet today to hammer out a new strategy to stem the contagion.
German Finance Minister Wolfgang Schaeuble said on radio station Deutschlandfunk that the nation opposes increasing the size of the euro area’s bailout fund.
“There’s plenty of reasons to be circumspect on the euro after the rally last week,” said Jeremy Stretch at Canadian Imperial Bank of Commerce. “If the markets perceive Germany isn’t so happy to back an increase in the bailout fund that leaves you with a less supportive backdrop.”
Bank of Japan Governor Masaaki Shirakawa said European financial markets remain unstable because of concern about the long-running crisis.
“Financial markets in Europe continue to be volatile because of concern about sovereign-debt risk,” Shirakawa said at a quarterly meeting of the BOJ’s branch managers today in Tokyo. At the same time, “global financial markets, on the whole, have maintained stability,” he said.
Australia’s dollar dropped to a six-week low versus New Zealand’s on concern record flooding will curtail economic growth.

EUR/USD fell to $1.3240 before rate recovered to $1.3340.

GBP/USD held within the $1.5830/70 range before recovered to $1.5955.

USD/JPY fell from Y83.00 to Y82.30 before back to Y82.53.

Volumes and flows light, with US markets closed for the MLK holiday.