The euro faltered broadly Thursday as a European Union statement of support for Greece failed to extinguish investor concern over the struggling country's stressed fiscal situation.
The common currency's slide in North American trading took it back to levels last seen Monday, erasing almost all of the gains it made this week on optimism that a solution for Greece's budgetary problems was in the works.
An afternoon rally in U.S. stocks and commodities helped the euro rebound from an earlier drop to near eight-month lows, but investors yearning for specifics on support for Greece kept the euro depressed on a day when other risk-sensitive currencies, such as the Australian dollar, rallied strongly.
The EU statement takes the worst-case scenario off the table for Greece, but also leaves plenty of room for anxiety in markets, and this will surely keep the euro depressed.
At a news conference Thursday, European Council President Herman Van Rompuy said euro-zone countries have pledged to support Greece through its debt crisis, but don't need to provide financial support right now. EU solidarity for Greece was not necessary today.
Markets were looking for more specifics on aid than EU leaders were willing to provide Thursday, and the euro suffered a sustained decline against the dollar as a result.
A backstop--as opposed to an outright bailout--might stabilize the euro for a short period of time, but sovereign debt problems and lack of growth prospects are likely to continue to dog the common currency.
The statement indicates EU officials won't let Greece fall off the map, but the euro will remain under pressure as sovereign debt issues in Portugal and Spain are waiting in the wings.
The dollar's strength against the euro was isolated, however, and the greenback declined against several other currencies, notably the Australian, New Zealand and Canadian dollars, after robust Australian job data helped underpin confidence in the global recovery.
Meanwhile, the currency market showed little reaction to news that U.S. initial claims for jobless benefits fell 43,000 to a seasonally adjusted 440,000 in the week ended Feb. 6.