2018.05.2801:18:00UTC+00Euro Rebounds from 6-½-Month Lows, Italy in Focus

The euro eased from a 6-½-month low versus the dollar on Monday, catching its breath after Italy's president tried to alleviate investor worries about political unrest in the country, although the prospect of a near-term election capped gains.

The euro rose 0.45 percent to $1.1703 after dropping on Friday to $1.1646, its weakest since mid-November, losing over one percent on the week.

The single currency was up 0.45 percent at 128.065 yen after slumping on Friday to an 11-month trough of 127.165.

The euro was seen to have received a mild lift after Italian President Sergio Mattarella on Sunday rejected Paolo Savona, a vocal critic of the single currency, as the economy minister. The two populist parties attempting to form a coalition in Italy had pushed for Savona to be appointed to the pivotal role.

However, the euro's bounce was limited as an early election in Italy looked inevitable as the far-right League and anti-establishment 5-Star Movement abandoned plans to forge an alliance after their choice of economy minister was vetoed.

Adding to the unrest in Europe, Spain's Prime Minister, Mariano Rajoy, was threatened with no-confidence motions and demands for a snap election.

The dollar index, which measures the greenback versus a basket of six major peers, slid 0.2 percent to 93.988 after climbing to 94.248 on Friday, its strongest since Nov. 14.

The greenback was up 0.05 percent at 109.400 yen after rising as high as 109.830 on a slight reflux in risk aversion after U.S. President Donald Trump said on Sunday a U.S. team had arrived in North Korea to prepare for a proposed summit between him and North Korean leader Kim Jong Un.

Trump had initially pulled out of the summit last week, which had reduced broader investor risk appetite and helped pull down the dollar to a two-week trough of 108.955 yen on Thursday.

The Canadian dollar extended Friday's losses to hit C$1.2992 per dollar, its lowest since May 8. The loonie had fallen roughly 0.8 percent on Friday as crude oil prices dropped.