Euro slips due to political uncertainty in Spain and Italy

Following Monday's drop, the euro tumbled once again against major currencies of the world on Tuesday due to political uncertainty in Italy and Spain.

The 17-nation currency dropped against the Japanese Yen and the US dollar in Tokyo. The euro slipped 0.2 per cent to 124.55 Yen as of 12:34 p. m. in Tokyo. Yesterday, the euro had tumbled 1.4 per cent, the most since 25th of June. It declined 0.2 per cent at US$1.3490.

The Japanese currency remained little changed at US$92.35, following yesterday's falling to as low as 93.18 a dollar.

Australian dollar slipped 0.2 per cent to US$1.0423. The MSCI Asia Pacific Index of stocks tumbled 0.7 per cent.

The euro fell amid political uncertainties in Spain and Italy. In Spain, Premier Mariano Rajoy is facing corruption allegations; while political uncertainty in Italy is due to looming elections.

Tim Kelleher, head of institutional forex sales at ASB Institutional, said, "We'd gone one way for the whole month of January and all those euro crosses were stretched. The risk is that the euro stays capped ahead of the ECB."

The euro and yen halted their hikes against the US dollar ahead of European Central Bank (ECB) policy makers' meeting on 7th of February.

The ECB, which has not revised its key refinancing rate at 0.75 per cent since July last year, is widely expected to keep the rate unchanged at its upcoming policy decision meeting. Analysts are of the view that ECB President Mario Draghi will make more dovish remarks, without announcing any change policy rate.