FOREX-Dollar buoyed by Bullard comments, yen sinks

* Comments by Fed’s Bullard favor dollar

* Euro support at $1.40, but seen in range below $1.4250

* Yen hits post-intervention lows vs euro, dollar

(Updates prices, adds quotes, changes byline, changes
dateline previous LONDON)

By Julie Haviv

NEW YORK, March 29 (Reuters) – The dollar rose on Tuesday
after a top Federal Reserve official said the central bank’s
asset purchase plan should be curtailed, but analysts said the
dollar would remain under pressure on views the Fed would lag
other monetary authorities in tightening policy.

The dollar was up sharply versus the yen, which retreated
to post-intervention lows, and was trading little changed
against the euro after initially rising on comments by St.
Louis Federal Reserve bank President James Bullard.

Bullard told an audience in Prague the U.S. economy was
strong enough to curtail the Fed’s $600 billion bond-buying
program by $100 billion. [ID:nLDE72S0RJ].

The program, aimed at keeping interest rates low to bolster
the economy, has been widely deemed a bane for the dollar on
views it is tantamount to printing money.

The euro (EUR=: Quote, Profile, Research) hit a session low of $1.4060 on the EBS
trading platform after falling through reported bids at
$1.4080. It last traded at $1.4088. Traders said reported
sovereign bids at $1.4050 could limit losses in the single
currency, however.

Views the European Central Bank would tighten before the
Fed also supported the euro.

“Euro/dollar is trading at the moment on two factors —
interest rate differentials and the technical configuration,”
said Niels Christensen, currency strategist at Nordea in

“The euro failed to break below $1.40 yesterday, and last
week it disappointed on the upside, failing to test the
November highs (at $1.4283), so it is likely to stay in a
$1.40-$1.42 range”.

The euro has retreated from a 4 1/2-month high of $1.4249
hit last week, but has been supported on the view the ECB may
raise interest rates at its next policy meeting on April 7.

The $1.40 level is supported by a trendline drawn from the
low below $1.30 hit in January, while the euro’s 21-day moving
average stands just above that level, at around $1.4006.

On the upside, heavy options-related barriers around
$1.4250 were expected to cap gains. A break of that level may
see a test of the November high of $1.4283.

One-month euro/dollar implied vol (EUR1MO=: Quote, Profile, Research) traded around
9.9 percent on Tuesday, near its lowest level in roughly a


Meanwhile, the dollar and euro both reached their highest
levels against the yen since March 18, when the Bank of Japan
and other major central banks intervened to stop runaway yen

“There are a lot of yen negatives right now,” said Steven
Englander, head of G10 strategy at CitiFX in New York.

“First, the rate differential between U.S. and Japanese
yields has widened, working in the dollar’s favor,” he said.
“Second, it is becoming increasingly clear that repatriation
flows (to Japan) are not panning out and if anything will be

The dollar rose to high of 82.42 yen (JPY=EBS: Quote, Profile, Research) on trading
platform EBS.

Solid support should continue to underpin it at 81.30,
Monday’s low, and this should stem near-term corrections,
according to IFR Markets, a Thomson Reuters service.

The rise in the U.S. currency versus the yen has quelled
speculation of further Japanese intervention. Many in the
market anticipate a fall to around 80 yen or lower will be
required for Tokyo to re-enter the market to sell the Japanese

The euro, meanwhile, rose to 115.86 yen (EURJPY=R: Quote, Profile, Research). It was
on course to test 116.03, above which would mark a 10-month

IFR Markets showed that euro/yen continues the recovery
from 113.56, last Thursday’s low and breaking above 115.56, the
March 18 high, would unlock 116.00, the 2011 high posted on
March 4.
(Additional reporting by Jessica Mortimer in London; Editing
by Andrea Ricci)

FOREX-Dollar buoyed by Bullard comments, yen sinks