FOREX-Euro pressures continue, dips to 2-week low

* Euro remains vulnerable, support in $1.3100-3090 area

* Dollar supported, Korean tensions watched

* But greenback lacks drive to push higher against yen

By Chikafumi Hodo and Hideyuki Sano

TOKYO, Dec 20 (BestGrowthStock) – The euro slid to a two-week low on
Monday, looking vulnerable to more losses against the dollar
after breaching chart support the previous day, while the
greenback was helped by rising tensions in the Korean Peninsula.

The euro, which was pressured by a five-notch downgrade of
Ireland’s sovereign credit rating on Friday, was within reach of
support at $1.3100-3090 (EUR=: ), a retracement level and its
200-day moving average.

On top of continued debt concerns in the euro zone, the
dollar was supported by tensions on the Korean peninsula, where
South Korea plans a live-firing drill and North Korea has
threatened to strike if the drill goes ahead. [ID:nNORKOR]

Many in the market expect the euro to remain vulnerable into
the new year as investors await more aggressive solutions from
European leaders to address debt concerns in the region, although
activity is dwindling ahead of holidays at the end of the week in
many financial centres.

“The dollar has been generally supported this morning by
tensions in the Korean peninsula and concerns over European debt
problems,” said Tsutomu Soma, senior manager at Okasan
Securities.

“The euro has been under pressure, especially since the
downgrading of Ireland last week … Selling pressure could
increase should the euro break $1.3.”

The euro’s November low, just below $1.2970, is seen as an
important support level.

The euro was down 0.5 percent from late U.S. levels, at
$1.3125, breaching Friday’s two-week low at $1.3133.

Those who had expected range-bound trade ahead of the
holidays, including some model players, are being forced to close
their euro long positions, traders said.

“Since the downgrading of Ireland last week the market has
become increasingly sensitive about debt problems in Europe,
which is keeping the euro on the defensive,” said a Japanese bank
trader.

Japanese exporters were also selling the euro, which helped
push the single currency to a two-week low of 110.34 yen
(EURJPY=R: ).

The euro also slipped 0.2 percent against the Swiss franc to
1.2750 (EURCHF=R: ), hovering just above a record trough of 1.2720
hit on Friday as investors continued to shun the euro.

The dollar slipped 0.2 percent against the yen to 83.87 yen
on Japanese corporate selling, slipping further below last week’s
three-month high of 84.51 yen, but escalating tensions in the
Korean Peninsula supported the dollar.

Speculators have been cutting their yen long positions. Data
from the U.S. Commodity Futures Trading Commission showed on
Friday they almost halved their net yen long positions to 12,735
contracts last week.

It lacks energy to rise strongly above 84 yen as many
investors in the United States and Europe are expected to refrain
from taking large positions ahead of the holidays, Soma said.

Sell orders rumoured to be lined up between 84.30-84.50 yen
are also expected to block the topside, he said.

The South Korean won shed more than one percent to 1,167.90
won per dollar (KRW=: ) on Monday, near a low around 1,170 hit in
the wake of North Korea’s shelling of a disputed island last
month.

Still, investors are not universally risk-averse, with the
Australian dollar rising 0.2 percent (AUD=D4: ) to $0.9895, though
it is still off a one-month high above $1 marked last week.

The U.S. CFTC data showed speculators increased their net
Aussie long position by more than 10,000 contracts to 53,778
contracts.

“The Aussie boasts the highest yield among liquid currencies,
and gold doesn’t look like falling in the near-term, making the
Aussie the best currency to hold during the holiday period,” said
a trader at a Japanese bank.

The dollar index (Read more about the global trade. ) (.DXY: ) was up 0.1 percent at 80.49.
(Reporting by Chikafumi Hodo; Writing by Charlotte Cooper;
Editing by Joseph Radford)

FOREX-Euro pressures continue, dips to 2-week low