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Euro strengthens against dollar, yen

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(Globalpost/GlobalPost)

The euro and the dollar traded near flat Tuesday after the Cyprus bailout sent the euro tumbling Monday.

Near 2200 GMT, the euro was valued at $1.2856, up slightly from Monday's level of $1.2853.

The euro also gained against the Japanese yen, garnering 121.56 yen, up from 120.96 yen Monday night.

The dollar also gained against the yen, trading at 94.55 yen against 94.10 Monday night.

The market remained cautious on the eurozone after the Cyprus deal was stuck to remake the island nation's banking sector and create the precedent of tapping bank bondholders and uninsured deposit holders for funds.

The euro Monday had tumbled to its lowest level in four months following comments from a top European finance official suggesting the Cyprus plan represented a "template" for future bank crises.

Traders were also cognizant of the tepid economic outlook for Europe, where "there are plenty of reasons why business and consumers have grown more pessimistic," said Kathy Lien, analyst at BK Asset Management.

These include economic deterioration in Germany, political uncertainty in Italy, and the weak labor market in France, Lien said.

"The combination of weaker economic data and continued uncertainty could put additional pressure" on the euro, Lien said.

On the other side of the Atlantic, US markets were subjected to a barrage of mixed economic data Tuesday.

On the positive side, the S&P/Case-Shiller Home Price index showed prices rose 8.1 percent for 20 leading cities for the 12 months to January, the highest year-over-year increase since mid-2006.

But the Conference Board index of consumer confidence dropped 8.3 points to 59.7, weakened by concerns over federal budget cuts.

The middling economic data will keep the question of the Federal Reserve ending quantitative easing "a long-term discussion," Lien said.

Among other currencies, the British pound traded at $1.5158, down from $1.5179 late Monday.

The dollar traded at 0.9484, flat with the level Monday.

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http://www.globalpost.com/dispatch/news/afp/130326/euro-strengthens-against-dollar-yen