Euro regains ground against dollar The euro bounced back from a near two-year low hit last week on hopes European policy makers were stepping up efforts to ease crisis fears. The US dollar and Japanese yen also fell back from fresh highs seen on Friday, after the weaker than expected US non-farm payrolls report sent stocks and other risky assets tumbling. The euro was up 0.5 per cent from Friday versus the dollar, when it touched its lowest since July 2010. It was holding at $1.2491 by midday in New York on Monday, having briefly touched $1.25. Mariano Rajoy, the Spanish prime minister, called for a new eurozone fiscal authority. Portugal separately agreed to put €6.6bn into its largest banks. "The suggestion that the eurozone is coming up with a master plan is providing a positive spin to the session," said Mary Nicola, a currency strategist at BNP Paribas in New York. But she added that the two-day UK public holiday at the start of the week meant: "We will not see a real trend until Wednesday." The dollar index, which measures the greenback against a trade-weighted basket of currencies, was down 0.4 per cent to 82.574, off its highest mark since August 2010. The yen was down 0.3 per cent versus the dollar, at Y78.27, and sterling was up 0.1 per cent to $1.5377. The market was also bracing for the Reserve Bank of Australia's interest rate policy meeting on Tuesday. The RBA is expected to lower its core rate by 25 basis points to 3.50 per cent, as judged by interest rate futures markets, according to Bank of America Merrill Lynch. Analysts at BofA Merrill said they believed it was unlikely the RBA would lower rates, in response to the European debt crisis, until the Greek election on June 17. The Aussie dollar was up slightly, by 0.1 per cent, to $0.9711 versus its US counterpart. "While it is quite plausible that the situation in Europe could deteriorate further . . . it seems unlikely that the RBA will be in a position to make an informed judgment about those risks ahead of the second Greek election," they said.