FOREX-US dollar rallies as euro again fails to break $1.4000

* US dollar up as euro fails to break $1.4000

* UK GDP lifts pound; Swedish crown falls on Riksbank

* Yen up; Japan finmin says to take steps on FX if needed

(Updates prices, adds detail, adds comment)

NEW YORK, Oct 26 (BestGrowthStock) – The U.S. dollar rose as the
euro again failed to hold above the $1.4000 level in the prior
session leaving investors wary of betting against the greenback
on Tuesday.

The Swedish crown and sterling were also actively traded
after the Swedish central bank, which raised interest rates as
expected, said future rate increases would be more gradual than
expected, [ID:nLDE69P0NR] while the British economy grew more
than expected.

Overall however, uncertainty over the extent of
quantitative easing measures the Federal Reserve may take next
week kept foreign exchange trading in predictable ranges.

Euro/dollar “has struggled to break sustainably above
$1.40,” said Camilla Sutton, chief currency strategist at
Scotia Capital in Toronto.

“We still expect this will be the next move, however if it
is unable to do so soon, we might see some temporary weakness
before markets have enough conviction to push it above this
level,” she said.

Midway through the New York session, the euro fell (Read more about the trembling euro. ) 0.7
percent to $1.3860 (EUR=: ) after failing to close above $1.4000
on Monday. The euro has support at 1.3860, its low on Friday,
and its 21-day simple moving average at $1.3866.

The euro fell (Read more about the trembling euro. ) to a session low after a report showed U.S.
consumer confidence rose slightly in October but then recovered
though it was still down on the day. [ID:nN26128177].

The move back below $1.4000 was viewed as significant given
the euro had failed several times in recent days to break
through and hold that level.

“I haven’t heard that $1.40 is any more significant than
any other number,” said Tom Levinson, FX strategist at ING in
London. “From the fundamental perspective the market mayu want
to wait for the Fed and until third quarter GDP numbers are

The market expects the Fed to opt for more quantitative
easing at its policy meeting next week, but some easing is seen
priced into an already weak dollar. How much easing the Fed
decides on and how gradually it will implement is uncertain,
keeping investors edgy about building more bearish bets on the

The advance release of U.S. third quarter gross domestic
product data is on Friday.

Should the euro break through $1.4000, resistance comes at
$1.4442 which is the 78.6 percent retracement of the move from
the $1.5141 high in November 2009 to the $1.1876 low in June
2010 said Dean Malone said Dean Malone, a currency director at
Compass FX in Dallas, Texas.

Large option barriers, including a one-touch option
barrier at $1.4215 that is set to expire on Wednesday may also
mute euro/dollar gains until expiration.


The dollar rose against the yen, edging away from 15-year
lows after Japan’s finance minister Yoshihiko Noda warned the
government would “act decisively” in currency markets if
needed. [ID:nTOE69O09F]

His comments pushed the greenback back above 81 yen, with
traders citing buying from Japanese life insurers and banks,
among others, on the view that Japan may intervene if the
dollar nears 80.00 yen.

“Japan has pointed out quite clearly that they will
intervene in dollar/yen if it falls too quickly and the market
is aware there is no easy one-way bet on dollar/yen downside,”
said Stephan Maier, currency strategist at Unicredit in Milan.

The dollar was up 0.6 percent at 81.24 yen (JPY=: ). It hit a
15-year trough at 80.41 yen on Monday on electronic trading
platform EBS (JPY=EBS: ), taking it near its record low of 79.75
yen, struck in April 1995.

Against a basket of currencies (.DXY: ) the dollar was up 0.6
percent at 77.552. It has support around 76.00-10, just below
its October 15 low of 76.144 while resistance is at 78.40.

Sterling was a clear outperformer, rising to a one-week
high at $1.5897 (GBP=D4: ) after figures showed the UK economy
grew 0.8 percent in the third quarter, twice as much as
economists had forecast. [ID:nLDE69P0VZ] Sterling extended
gains after S&P rating agency raised its outlook on the UK to
stable from negative. [ID:nWLA6239]

The Swedish crown fell broadly with the euro rising more
than 1 percent to a peak of 9.3414 crowns (EURSEK=: ).
(Additional reporting by Jessica Mortimer in London)
(Reporting by Nick Olivari)

FOREX-US dollar rallies as euro again fails to break $1.4000