FOREX-Dollar slides broadly; talk of further easing weighs

* Euro breaks key resistance level vs dollar

* Euro/sterling surge spills over to euro/dollar pair

* Dollar/yen at new post-intervention low
(Adds details, updates prices)

By Vivianne Rodrigues

NEW YORK, Sept 28 (BestGrowthStock) – The dollar fell broadly on
Tuesday as a decline in U.S. consumer confidence to the lowest
level since February increased expectations the Federal Reserve
will print money to buy assets.

The euro surged to a five-month high against the greenback,
smashing a key resistance level and option barriers on its way
up, a signal of further gains in the single euro-zone
currency.

The yen also firmed, pushing the dollar to below 84 yen,
its weakest since Japan intervened in the foreign exchange
market two weeks ago to halt its currency’s rise.

The Federal Reserve is likely preparing a fresh round of
quantitative easing measures to announce at the end of its Nov.
2-3 meeting, a report by influential hedge fund adviser Medley
Global Advisors said on Tuesday, a source told Reuters. For
details, see [ID:nN28181349]

The Wall Street Journal reported that the Fed is weighing a
more open-ended, smaller-scale bond buying program.

“The trend is still dollar-negative. Some kind of
quantitative easing is probably coming up,” said Kaz Shirai, a
forex interbank trader at Union Bank of California in Los
Angeles.

“There’s also been talk on Wall Street that $1 trillion may
be needed — and that’s still a lot of money. That’s pushing
10-year yields down, which helps dollar sellers,” he added.

On Wall Street, U.S. stocks (Read more about the stock market today. ) rose on the expectations the
Fed will pump more money into the economy, which Shirai said
brought out more risk-takers, benefiting the euro and
higher-yielding currencies such as the Australian dollar.

“We’re making a new high on the euro,” he said, helped by
some option-related buying.

The euro earlier broke a well-flagged resistance at
$1.3511, the 50-percent Fibonacci retracement of its fall from
$1.5145 last November to its June low around $1.1876.

The euro (EUR=EBS: ) rose as high as $1.3595, according to
electronic trading platform EBS, taking out barriers at
$1.3525. It last traded at $1.3588, up almost 1 percent.

Gains in the euro accelerated after the Conference Board,
an industry group, reported weaker-than-expected U.S. consumer
confidence data for September. [ID:nN28177460]

According to CitiFX, the next stop in euro/dollar is likely
the 55-week moving average that comes in at $1.3630. The bank
said there is solid resistance above that level, specifically
at $1.3670-$1.3740, where the highs from December 2004, April
2007, and March 2009 converge.

“It really is a ‘classic QE day,'” said Tom Fitzpatrick, a
currency analyst at Citigroup. “Bonds rally, equities rally,
the dollar goes down and gold hits new highs. At this point,
that is what’s driving the markets.”

EURO AT $1.39?

Brian Dolan, chief currency strategist at Forex.com in
Bedminster, New Jersey, said over the medium term, he is
looking for a rise in the euro to between $1.38 and $1.39.

“There are a few stopping points in between ($1.35 to
$1.38) but it could easily happen over the next few days as the
euro has gained nearly 5 percent over the last week or so. The
euro is the standout here.”

Analysts said gains in euro/sterling also helped the euro
advance against the dollar. The euro surged against sterling
after Bank of England policy maker Adam Posen said the British
central bank should start pumping more money into the economy.
[ID:nLAC005768]

The euro rose 1.2 percent against sterling, to around 85.97
pence (EURGBP=D4: ).

Against the yen, the greenback hit a low of 83.68 yen,
according to electronic trading platform EBS. The dollar last
traded at 83.87 yen (JPY=EBS: ), down 0.5 percent on the day.

With dollar/yen trading near the lows, investors were on
alert about possible intervention by Japan to stem the yen’s
strength.

Michael Woolfolk, senior currency strategist at BNY Mellon
in New York, said the pair would need to go lower in order for
Japanese authorities to step in.

FOREX-Dollar slides broadly; talk of further easing weighs