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. Last Updated: 07/27/2016

Weak Dollar's Slide Boosts Euro and Yen

LONDON -- The dollar dropped to multiyear lows on major currencies, bringing the euro within grasp of its debut level on Monday, after U.S. Treasury Secretary John Snow cemented views that Washington backed a weaker dollar.

Speaking after the Group of Eight finance ministers' meeting in France on Saturday, Snow said recent currency movements had been "fairly modest."

Dollar-selling came in several waves, drawing covert yen-selling intervention from Japanese authorities, traders said, and bringing the euro's 1999 launch rate of $1.1747 into view.

"Snow seemed to give a green light to selling," said Rob Hayward, senior foreign exchange strategist at ABN AMRO in London.

Analysts took Snow's statement, coupled with conspicuous silence from other countries on foreign exchange levels, to mean no concerted policy effort would be launched to stop the dollar's fall.

The greenback set a fresh four-year low at $1.1738 per euro in early Europe trading but by mid-morning it was back to $1.1710. It was still more than 1 percent down from late Friday trade.

"We may have to wait until New York comes in before selling restarts, although we may get more selling sooner. There is not a huge amount of resistance and $1.1750-80 is likely today," Hayward said.

The dollar also set its lowest level against the Swiss franc since October 1998, shedding more than 1 percent of its value. It hit a two-year low versus the yen just above 115.00 yen and was sharply down versus sterling.

"The U.S. strong dollar policy has dramatically changed. The market is taking the view that there was no policy resistance coming from the G-7 to slow this dollar weakness," said Trevor Dinmore, currency strategist at Deutsche Bank.

"People are moving toward diversifying from the euro into other currencies, like the Swiss franc and yen. The yen is a liquid alternative to buy against the dollar," Dinmore said.

But investors continued to face stiff resistance from Japanese authorities to curb the export-damaging yen's rise and Tokyo traders reported the Bank of Japan had been seen buying dollars around 115.10 yen, the greenback's lowest level since February 2001.

Traders said Japanese monetary authorities had intervened sporadically during the session to curb the yen's rise.

One senior forex trader said that a small number of Japanese banks were rumored to be bidding steadily after the dollar dropped below 115.50 yen. Those purchases were thought to be conducted on behalf of the Japanese authorities.

"Momentum of the dollar's downtrend is picking up. The market is very eager to see whether it will break below 115 yen," the trader said.

With no major U.S. data due this week, investors were awaiting the appearance by the Federal Reserve Chairman Alan Greenspan before the congressional Joint Economic Committee on Wednesday.

They were eager to see how Greenspan would assess the risk of deflationary pressure in the United States as well as the possibility of another U.S. interest rate cut.