FOREX-Euro bounces back as dollar falls broadly

TOKYO, Dec 28 (BestGrowthStock) – The euro rose sharply as bears were
forced to abandon their bets on Tuesday while the dollar came
under broad selling pressure, hitting a three-week low against
the yen and a seven-week low against the Australian dollar.

The euro jumped after stop-loss orders at key chart points
around $1.32 were triggered. It rose to $1.3250 (EUR=: ), its best
level in more than a week and extending its recovery from last
week’s three-week low of $1.3055.

Euro bears who have been frustrated by the currency’s firm
support at its 200-day moving average just below $1.31 for more
than a week are giving up their positions for now, some traders
said.

Many in the market have been betting on more weakness in the
euro due to persistent worries that some euro zone countries such
as Spain and Portugal may need rescue programmes to finance their
debt.

“It’s a flow-driven market so it’s hard to tell how long this
rise in the euro will continue,” said a trader at a European
bank, noting that a speculative player appears to be trying to
take advantage of thin trade to push up the euro.

The euro could target $1.3278, a 50 percent retracement of
its fall earlier this month from $1.3500 to $1.3055, and then
$1.3330, a 61.8 percent retracement.

The dollar was weaker against most other major currencies and
Asian currencies as well, with the Australian dollar rising to a
six-week high against the U.S. dollar.

“U.S. bond yields fell yesterday. I think that’s marginally
negative for the dollar,” said a trader at a Japanese bank.

U.S. bond yields fell after a two-year note auction attracted
buyers, although a heavy snow storm in the northeastern United
States made a holiday-thinned market even thinner.

The Aussie rose to $1.0082 (AUD=D4: ), its highest level since
mid-November.

The dollar also briefly dropped to a three-week low of 82.64
yen (JPY=: ) before recapturing some of its losses to trade at
82.72 yen, down 0.1 percent on the day.

For now, the dollar was finding support at its 55-day moving
average around 82.62 yen,

Another support level is around 82.40 yen, the bottom of a
daily ichimoku cloud.

Still, the bottom of the cloud is expected to gradually rise
later in the week, rendering it thinner towards early January and
pointing to a higher risk of the dollar falling below the cloud.
That would be considered a major bearish signal.

“The dollar/yen looks precarious on the ichimoku chart. If it
falls below 82.50 yen today, there’s a greater risk of it falling
below the cloud in coming days,” said Teppei Ino, analyst at the
Bank of Tokyo-Mitsubishi UFJ.

The market showed no reaction to a raft of Japanese economic
data, which mostly met market expectations.

Industrial production rose 1.0 percent in November and
manufacturers forecast further increases in the following months,
while core consumer prices fell 0.5 percent from a year earlier,
slightly less than the median forecast of a 0.6 percent fall.
(Reporting by Hideyuki Sano; Editing by Edmund Klamann)

FOREX-Euro bounces back as dollar falls broadly