FOREX-Euro steadies on Ireland deal hope; Aussie falls

* Euro steadies on hopes for Irish aid package support

* China tightens by raising bank reserve requirements

* Bernanke defends QE, says it is not debasing dollar
(Adds quote, updates prices)

By Wanfeng Zhou

NEW YORK, Nov 19 (BestGrowthStock) – The euro steadied versus the
dollar on Friday on growing confidence that Ireland’s banking
and debt crisis will be resolved, with key resistance capping
upside in the near term.

Hopes that Ireland was near a deal to get tens of billions
of euros from its European partners and the IMF helped push the
euro above $1.37 overnight, but momentum stalled ahead of
resistance around $1.3750. Traders said this level is likely to
hold until markets get more details on the Irish rescue plan.

A deal to help Ireland cope with its battered banks will be
unveiled next week, EU sources said on Friday. Its government
would publish the details of a four-year fiscal plan to save 15
billion euros at roughly the same time. For more see
[ID:nLDE6AI0QG].

“Even if the way to stability is not exactly clear, the
market seems to be getting more comfortable with the idea that
ultimately the situation will be stabilized one way or the
other,” said Daniel Katzive, currency strategist at Credit
Suisse in New York. “The tail risks for the euro are not as
severe as they were in April and May.”

The euro (EUR=: ) was last little changed at $1.3643, after
rising as high as $1.3733 on trading platform EBS. It has
recovered from a slide to a seven-week low of $1.3446 earlier
in the week and is poised to end the week slightly lower
against the dollar.

The euro zone single currency remained resilient after news
that China tightened monetary policy by raising banks’ reserve
requirements, which dented some risk appetite. [ID:nL3E6MJ0N8]

Support come in at the 55-day moving average at $1.3607.
Traders said the euro still needs to get above resistance at
$1.3750 to put an end to the downward correction of the last
couple of weeks.

“That’s the level from which the euro broke earlier to run
to the $1.42 level. Now we’re having a hard time clearing it,”
said Boris Schlossberg, director of currency research at GFT in
New York.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Take a Look on Ireland crisis: [ID:nLDE68T0MG] Graphic on euro zone's struggle with debt:

http://r.reuters.com/hyb65p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

BERNANKE DEFENDS QE

Some analysts said even if Ireland does get a rescue, the
euro is unlikely to see a big rally. “If there’s a bailout for
Ireland, that’s been largely priced in,” said Aroop Chatterjee,
currency strategist at Barclays Capital in New York.

He added that funding concerns and fiscal consolidation
will remain negative for the euro next year. He expects the
euro to rise to $1.38 in one month, before sliding to around
$1.30 over 12 months.

Against the yen, the euro rose 0.1 percent to 114.06
(EURJPY=R: ), up from the week’s low around 112.20 yen.

Despite the worries about Ireland and the risk of contagion
to Portugal and Spain, Stephen Gallo, head of markets analysis
at Schneider FX, said the markets are “not seeing the vicious,
speculative selling of the euro as we did during Greece’s
problems.

“You’re also not seeing real money moving out of their
longer-term euro long positions,” he said, adding that selling
in the euro under $1.3500 had offered a good chance for
long-term investors to pick up euro assets, albeit
cautiously.”

In prepared remarks for delivery at a conference in
Frankfurt, Federal Reserve Chairman Ben Bernanke hit back at
critics of the U.S. central bank’s latest bond-buying program.
He also issued a thinly veiled attack on China’s policy of
keeping its currency weak. [ID:nN18107490]

His remarks helped push down U.S. Treasury yields, leading
to a fall in the dollar versus the yen. The pair last traded at
83.48 yen (JPY=: ), flat on the day.

Higher-yielding commodity-linked currencies such as the
Australian dollar (AUD=D4: ) fell after China’s tightening move.
Australia is a large exporter of commodities to China and tends
to weaken on worries of a slowdown in the Chinese economy. The
Aussie dollar last traded at US$0.9844, down 0.5 percent.
(Additional reporting by Tamawa Desai in London; Editing by
James Dalgleish)

FOREX-Euro steadies on Ireland deal hope; Aussie falls