Friendless euro sinks to fresh depths, dollar firms

SYDNEY (Reuters) - The euro sank to a fresh 12-year low early on Monday after a recent bounce was met with fresh selling interest in a sign that investors were still very bearish on the common currency.

It fell as far as $1.0457 early in Asia, having closed below $1.0500 on Friday for the first time since January 2003. It has since drifted back to $1.0498.

"While we have hit our mid-year EUR/USD target of 1.05...we see no reason to fade the downtrend," said Elsa Lignos, senior currency strategist at RBC Capital Markets.

"Our technical team highlights rallies to resistance at 1.0765 as a selling opportunity, targeting 1.0073."

Last week, the common currency skidded 3.2 percent, suffering its biggest weekly fall since September 2011 as the European Central Bank kicked off its 1.1 trillion euro bond-buying stimulus program.

Against the yen, the euro fetched 127.48, holding near a 21-month trough of 126.85 set on Friday.

Persistent weakness in the euro helped the dollar index stretch to a 12-year high of 100.420 in early trade. It was last at 100.140.

The greenback was flat on the yen at 121.40, though it remained within striking distance of a near eight-year peak of 122.04.

Data from the Commodity Futures Trading Commission on Friday showed currency speculators piled onto long dollar bets in the week ended March 10.

Partly underpinning the move is expectations that the Federal Reserve will soon raise interest rates. Many analysts suspect the Fed will lay the groundwork for a move as soon as midyear at this week's policy review.

"We expect the Fed to drop 'patient' this week, but to compensate with its growth and inflation forecasts ... and the Chair will likely emphasize gradual normalization," analysts at Barclays wrote in a note to clients.

Among commodity currencies, the Canadian dollar languished at six-year lows as a combination of U.S. dollar strength and falling oil prices weighed heavily on the currency.

The loonie stood at C$1.2796 per USD, flirting with Friday's six-year trough of C$1.2824 per USD.

A dearth of major economic news out of Asia on Monday could see the market drift in tight ranges. Investors are also likely to tread cautiously ahead of the Fed's March 17-18 meeting.

(Editing by Sandra Maler)