The euro stabilized after hitting a four-year low against the dollar on Monday as a pickup in global share prices from early losses prompted some investors to cover short euro positions.
European corporate demand helped to lift the euro after it fell to $1.1876 U.S., its weakest since March 2006, but gains were limited as a warning from Hungary last week about its fiscal woes reminded investors of the scale of debt problems in Europe.
The euro stayed on the back foot after tumbling 1.5% against the dollar on Friday, when weaker-than-expected U.S. jobs data sparked concerns the global economic recovery may be losing steam and cut demand for riskier assets.
European shares recovered much of their early losses. Analysts said equities were finding their footing on the view that Friday's selloff may have been overdone.
Traders said demand from corporates and real money accounts was helping to pull the single currency off its lows, although many investors see the euro grinding lower in coming weeks as the euro zone debt problems are expected to stifle the region's economic recovery.
A bigger-than-expected jump in German industrial orders and reasonable demand at an offer of Belgian government debt were helping to bolster the euro, market participants said.
European shares traded 0.3% lower, clawing back ground after hitting their lowest in nearly a week in earlier trade. U.S. stock futures rose 0.2%, recovering from an earlier fall.
The dollar index was little changed on the day at 88.321. The euro's earlier slide had pushed the U.S. currency to a 15-month high at 88.708 against a currency basket.
The euro was unchanged at 109.66 yen, having earlier hit an 8-1/2-year low of 108.06 yen on the EBS trading platform. The yen pared gains made in early trade, but was generally supported as investors continued to favor the low-yielding currency.
Concerns about public finances in Hungary -- a member of the European Union, though not the euro zone -- added to market jitters after comments last week by government officials that Hungary could face a Greek-style crisis.
The Hungarian government downplayed the comments at the weekend but analysts said the comments had reignited concerns about whether peripheral euro zone countries will be able to deliver tough austerity measures, and worries about European banks' exposure to Hungary.
G20 finance ministers meeting at the weekend did not voice any strong concern about the euro's sharp slide on Friday, nor did euro zone policymakers, further encouraging euro selling, traders said.
Weaker-than-expected U.S. payrolls data on Friday reinforced views the U.S. economic recovery may be slow and could jeopardize the wider global recovery.
These issues have helped to cut demand for euros. IMM data on Friday showed net short positions in the single currency remain high even as some were cut last week.
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