TOKYO: The euro strengthened in Asia on Tuesday afternoon in thin holiday trade while dealers looked ahead to a string of US and eurozone data for hints about the state of the global economy.
The common currency changed hands at $1.2345 and 96.81 yen in Tokyo trade, from $1.2333 and 96.55 yen in New York late Monday.
The euro's rise against the dollar follows a successful Italian debt auction and a smaller-than-expected contraction in Greece's second-quarter gross domestic product, analysts said.
The dollar bought 78.42 yen, against 78.32 yen, with speculation growing that Japanese authorities would intervene in currency markets in a bid to tame the yen's surge.
The dollar will likely continue trading in a narrow range against the yen Tuesday with markets quiet over Japan's week-long Obon summer holiday, said Kengo Suzuki, a forex strategist at Mizuho Securities in Tokyo.
“I think the (dollar/yen) pair may start feeling heavy around 78.50-78.55,”with few leads to push the greenback higher, he told Dow Jones Newswires.
The dollar was also getting support from importers buying the unit, said Daisaku Ueno, senior foreign exchange and fixed income strategist at Mitsubishi UFJ Morgan Stanley.
Eyes will be on Europe later in the day, with France and Germany due to release growth data, while in the United States retail sales will provide an indication of how strong the world's number one economy is.
The euro “will be under selling pressure” ahead of the European data, said Masafumi Yamamoto, chief currency strategist at Barclays Capital, amid concerns about implementing fiscal austerity measures to battle the eurozone crisis.
The dollar strengthened against most other Asia-Pacific currencies.
It rose to Tw$30.01 from Tw$29.98 on Monday, to 41.97 Philippine pesos from 41.90 pesos, to 55.63 Indian rupees from 55.36 rupees, and to Sg$1.2459 from Sg$1.2452.
It also advanced to 9,485 Indonesian rupiah from from 9,458 rupiah and to 31.47 Thai baht from 31.44 baht.
The greenback softened to 1,130.36 South Korean won from 1,130.75 won.
The Chinese yuan bought 12.33 yen against 12.31 yen.