FOREX-Euro remains under pressure, 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 session, while the
market kept watch on 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.

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

South Korea started a planned artillery firing drill on
Monday, despite threats of attack by North Korea and pressure
from Russia and China to cancel the exercise. South Korean stocks
and the won fell early in the day but later cut their losses.

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

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

The euro was down 0.2 percent from late U.S. levels, at
$1.3161, after earlier slipping to a two-week low of $1.3125.


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

Japanese exporters were also selling the euro, which helped
push the single currency to a two-week low of 110.17 yen

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 eased 0.1 percent against the yen to 83.88 yen
(JPY=: ) on Japanese corporate selling, slipping further below last
week’s three-month high of 84.51 yen.

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

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

However, speculators have been cutting their long yen
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. [IMM/FRX]

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

Still, investors are not universally risk-averse, with the
Australian dollar rising 0.1 percent (AUD=D4: ) to $0.9885,
although it is still off a one-month high above $1 marked last

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

“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 Edmund Klamann)

FOREX-Euro remains under pressure, dips to 2-week low