* Euro hits near two-month low versus firmer dollar
* Concerns before Greek austerity vote dent euro
* Euro well below support at 200-day moving average
* U.S. election uncertainty underpins dollar
By Jessica Mortimer
LONDON, Nov 5 The euro fell to a near two-month
low against a buoyant dollar on Monday on uncertainty over a
Greek vote on reforms and before this week's U.S. presidential
Greece's government will present the latest austerity
package needed to secure international aid to parliament on
Monday but will struggle to get it approved in a vote expected
The euro fell 0.4 percent to $1.2778, breaking below
a reported options barrier at $1.2800 and stop loss sell orders
at $1.2780 to mark its lowest since Sept. 11. It was last at
$1.2790 and traders said if Greece failed to pass the reforms
package, the euro could drop to $1.2625/50.
Having broken below the 200-day moving average around
$1.2836, chartists said the euro could face further losses,
although it has near-term support at the Sept 11 low of $1.2753.
If the euro closes below the 200-day moving average it would
be the first time since September and could signal a departure
from its recent $1.28-$1.32 range.
Euro weakness helped the dollar to a two-month high against
a basket of currencies. Uncertainty about the U.S. election, in
which incumbent Barack Obama and Republican Mitt Romney are neck
and neck in the polls, encouraged safe-haven flows into the U.S.
"With the euro there is concern about what's going on in
Greece, that they might not might not get the austerity vote
through, and with the dollar the fiscal cliff is really getting
some attention before the elections," said Arne Lohmann
Rasmussen, head of currency research at Danske Bank, Copenhagen.
He said the dollar was also helped by Friday's
better-than-expected U.S. jobs data.
The dollar index hit 80.79, its highest since early
September as it surpassed resistance at the 200-day moving
average at 80.672.
With the Republicans seen retaining control of the House of
Representatives, victory for Obama would be seen as raising the
risk of policy paralysis over the 'fiscal cliff'.
If Congress cannot agree new arrangements, about $600
billion in government spending cuts and higher taxes will kick
in early next year, all of which could hurt U.S. economic growth
and underpin safe-haven assets.
The yen, often sought after during times of uncertainty,
outperformed. Against the yen, the dollar fell on profit-taking,
easing 0.2 percent to 80.28 yen, having hit a four-month
high of 80.68 yen on Friday after the U.S. jobs data.
"Dollar/yen is the most sensitive to the outcome of the U.S.
elections," said Beat Siegenthaler, currency strategist at UBS,
Zurich. "While expectations of a Romney win has helped the
dollar rise above 80 yen, there has been some paring back of
He added an Obama win could cost the dollar some of its
recent gains although in the medium term if U.S. data signalled
an economic recovery, the dollar would benefit against the yen.
Some in the markets say Romney is opposed to the Federal
Reserve's bond-buying programme, which has anchored yields. So
if he won Treasuries could sell off, driving yields and the
The dollar faces chart resistance at 80.65 yen, a 50 percent
retracement of its decline from March to September, but many
analysts expect it to rise in the near term.
Danske's Rasmussen said he favoured buying the dollar on any
dips against the yen, given that the Bank of Japan "has really
shown it is ready to be more aggressive and we see Japanese
Japanese corporate earnings have been soft. Third-quarter
economic output data, due on Nov. 11, is likely to show the
economy contracted sharply, a factor likely to weigh on the yen.