Analysts said that traders were expressing doubt about the long-term staying power of the buck, despite its recent resurgence.

Bears argued that the greenback’s recent jump was largely a rebound from technically oversold levels and that fundamentals will favor a return to weakness in the U.S. currency in the near term.

There was, however, some level of support for the dollar, in the form of hesitancy among forex traders to be short the currency ahead of the Group of Eight meeting in Italy, which begins on Friday.

“The looming G8 meeting this weekend is no doubt cause for some squaring of (U.S. dollar-short positions) to protect against any comments from the sidelines to the effect that (the dollar’s) decline has been unreasonably rapid in recent weeks,” wrote Sue Trinh, of RBC Capital Markets,.

Technicians chimed in, noting that euro’s dip on Monday following Standard & Poor’s downgrade of Ireland’s credit rating failed to break below an important support level at $1.374.

Elsewhere, the Financial Times reported that BlackRock (NYSE:BLK) is close to an acquisition of Barclays Global Investors, in a deal that could reach $13 billion. The buyout would included BGI’s iShares, the exchange-traded fund business.

That would negate a $4.4 billion April agreement, in which Barclays agreed to sell iShares to private-equity group CVC Capital. But the deal included a “go-shop” clause, giving Barclays until June 18 to come up with a better offer.

Rumors also have Bank of New York Mellon, Vanguard Group and others in the running to buy iShares or BGI (NYSE:BGI), the world’s largest money manager with more than $1.5 trillion in assets under management. The stakes are high, and this could get very interesting.

Source: Dollar Skids Against Euro