FOREX-Euro hits 3-week low vs dollar; Swiss franc falls

* Euro rises versus Swiss franc but outlook shaky

* China reiterates support for euro zone countries

* Euro/dollar bounces around 200-day moving average”
(Adds quote, updates prices, changes byline, dateline,
previous LONDON)

By Wanfeng Zhou

NEW YORK, Dec 23 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) to a three-week
low against the dollar on Thursday amid persistent concern
about debt troubles in Europe, though analysts said strong
technical support levels could limit near-term downside.

The euro earlier fell to around $1.3050, below its 200-day
moving average currently located at $1.3092 on trading platform
EBS. Investors have pushed the euro beneath this key support
level for the past three sessions, only to see the currency
bounce back later in the day.

Analysts said the euro will likely hold above $1.30 in the
coming days, with traders reluctant to place big bets before
year-end. The outlook for the single currency remains shaky,
with fresh losses expected into 2011, they added.

The Swiss franc weakened broadly as investors booked
profits on a rally had seen the Swiss currency hit record highs
versus the euro for six consecutive days. The euro zone debt
crisis has prompted investors to flock to the safe-haven Swiss
franc in recent weeks.

U.S. economic data showing a small drop in weekly jobless
claims and a smaller-than-expected rise in consumer spending
had little impact on the dollar. With liquidity thinning ahead
of year-end, traders said flows were having a bigger impact on
price than fundamentals.

“We are looking for euro/dollar stability above 1.30 moving
in to the end of the year,” said Sacha Tihanyi, currency
strategist at Scotia Capital in Toronto.

“With the late November and early December tests at that
level, and the subsequent failure of euro/dollar to sustainably
break below, I’d say that 1.30 looks like strong support,” he

In early trading, the euro was down 0.3 percent at $1.3066
(EUR=EBS: ), after having dropped as low as $1.3055 on EBS, and
was on track for a weekly loss of about 0.9 percent.

The euro had earlier risen after a Chinese Foreign Ministry
spokeswoman said China was willing to help countries in the
euro zone return to economic health and would support the
International Monetary Fund bailout package for the bloc. For
more, see [ID:nBJI002501]

On Wednesday, the Jornal de Negocios daily reported that
China was looking to buy between 4 and 5 billion euros of
Portuguese sovereign debt to help the country ward off pressure
in bond markets.

“To have any discernible effect China will have to buy a
lot more than 5 billion euros if they expect to have any impact
on the negative sentiment surrounding Europe,” said Michael
Hewson, currency analyst at CMC Markets.

The euro was up 0.8 percent at 1.2560 Swiss francs
(EURCHF=: ), after hitting an all-time low of 1.2440 on trading
platform EBS on Wednesday.

“As long as there are periphery concerns in the euro zone,
a lower euro/Swiss is very hard to fight,” Lignos said.

A North Korean minister saying his country was prepared to
wage a “holy war” against the South using its nuclear deterrent
[ID:nTOE6BL01] had no discernible impact on major currencies.

The dollar fell 0.6 percent to 83.06 yen (JPY=EBS: ) in
thinned trade with Tokyo closed for a national holiday and
ahead of the Christmas holidays in the United States and

Support at the top of the Ichimoku cloud gave way in Europe
at 83.08 yen. The base of the cloud was seen as the next
support, at 82.07 yen. Bids were seen around 82.80 yen.
(Additional reporting by Neal Armstrong in London; Editing by
Chizu Nomiyama)

FOREX-Euro hits 3-week low vs dollar; Swiss franc falls