Euro firms against dollar in Asian trade

The euro rebounded against the dollar in Asian trade today but ongoing worries over Europe's debt woes will see investors favouring the greenback over the long-term, analysts said.

The euro rose to $1.2985 from $1.2939, while the dollar was trading at 76.85 yen from 76.98 late Friday in New York. Markets were closed yesterday and today in Japan for public holidays.

The European unit also firmed against the yen, changing hands at 99.79 against 99.62 late Friday.

"With the euro facing capitulation risks in [the first quarter], the first half of the year is likely to favour the US dollar as a safe haven currency," Singapore's DBS bank said in a commentary.

"The euro zone sovereign debt crisis is no longer only about the peripheral countries.

"Rating agencies have placed the whole region on negative watch including the AAA-rated core EU economies."

DBS bank said it expects the euro to decline to $1.20 by the end of this quarter.

The euro zone's still-unresolved fiscal woes have dented the single currency with Spain announcing Friday 8.9 billion euros in budget cuts and higher taxes as it moves to curb a bigger-than-expected public deficit.