FOREX-Euro pares losses after smooth Greek auction

* Euro bounces back to trade close to flat on the day vs dlr

* Greek auction results provide short-term support

* Losses made after Portuguese downgrade are erased

(Changes lead; adds quote, detail)

By Neal Armstrong

LONDON, July 13 (BestGrowthStock) – The euro pared losses on Tuesday
after a smooth Greek treasury bill auction offset the negative
effects of an earlier Portugal ratings downgrade.

Greece’s Public Debt Management Agency (PDMA) sold 1.625
billion euros ($2.03 billion) of 6-month T-bills on Tuesday, its
first debt sale since a giant EU/IMF emergency loan backstop
agreed in May. [ID:nATH005574]

“We were expecting a good result, and it’s good for Greece
and the euro, but Greece has a long way to travel, as its
economic challenges are pretty severe.” said Paul Robinson, fx
strategist at Barclays Capital.

“It’s going to take years for Greece to figure this out, not
just one auction,” he added.

By 0950GMT, the euro had recovered back to trade close to
flat on the day versus the dollar (EUR=: ) at $1.2585.

The shared currency had fallen around 40 ticks to the day’s
low of $1.2523 (EUR=: ) when Moody’s cut Portugal’s debt rating by
two notches to A1 with a stable outlook, saying the government’s
financial strength was likely to weaken over the near term.
[ID:nWLA8184]

Traders said range players were the euro buyers around the
lows, the same accounts then looking to sell around $1.2640.
They noted a major U.S. bank protecting a short-term option
barrier at $1.2500.

Asian buyers were also reported in the $1.2500 region, while
real-money accounts were layering bids from $1.2490.

Key resistance for the euro was seen around $1.2687, the
trendline from the December high.

“While capped by $1.2687, our stance will be negative,”
Commerzbank technical analysts said in a note to clients.

A robust response to a Spanish debt auction earlier this
month took the euro to two-month highs. That coincided with
worries the United States was heading towards a double-dip
recession, sending the greenback to its lowest in nearly two
months against a basket of currencies.

Those concerns have taken a back seat, but traders said real
money investors and margin traders were still cautious, given
lingering worries about a global slowdown.

DOLLAR INDEX

The dollar index (Read more about the global trade. ) was flat on the day at 84.205 (.DXY: ) while
the U.S. currency was a touch weaker against the yen at 88.47
yen (JPY=: ).

“Dollar/yen continues to be suppressed by the options market
and 87.80 to 89.10 has us contained for now,” said a spot trader
at a U.S. bank in London.

The yen struggled for most of the previous session, after
Japan’s ruling Democratic Party suffered a stinging defeat in a
weekend parliamentary election, but the currency recouped its
losses during North American trade.

Higher-yielding currencies such as the Australian and New
Zealand dollars initially benefited after Alcoa (AA.N: ) posted a
higher-than-expected profit for the second quarter on Monday.
[ID:nN12206110]

But those currencies later gave back gains as Shanghai
shares (.SSEC: ) closed down 1.6 percent, having fallen more than
2 percent at one point after the government said it would
continue to rein in speculation in the country’s red-hot
property sector. [ID:nTST000264]

Other Dow heavyweights reporting earnings this week include
Intel Corp (INTC.O: ), JPMorgan Chase (JPM.N: ) and General Electric
(GE.N: ).

(Additional reporting by Naomi Tajitsu, editing by Nigel
Stephenson/Ruth Pitchford)

FOREX-Euro pares losses after smooth Greek auction