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FOREX-Euro wallows around one-week lows against dollar

by on September 26, 2012 12:12 am BST
 

Tue Sep 25, 2012 8:12pm EDT

* Spain protests, bailout hesitancy weigh on euro

* Euro support intact at 200-day moving average at $1.2826

* Heavy dollar bids cited at 77.50 yen

By Lisa Twaronite

TOKYO, Sept 26 (Reuters) – The yen pushed higher while the
euro remained around one-week lows against the dollar in early
Asian trade on Wednesday, pressured by concern about Spain’s
hesitancy to request a bailout even as protests there turned
violent.

Protesters clashed with police in Madrid on Tuesday, as
Spain prepared for a new round of unpopular austerity measures
in the 2013 budget.

Against this backdrop, investors will likely be searching
for safe havens to store their wealth, said Neal Gilbert, market
strategist at GFT.

“The Asian trading session will likely be a continuation of
what has been going on in the second half of the U.S. trading
session, which means downward price action, particularly in the
euro crosses,” he said.

The euro fell about 0.1 percent to $1.2897 after
dropping as low as $1.2886 on Tuesday, which was its weakest
since Sept 13. It moved further away from a four-month high of
$1.3173 hit on Sept. 17 on the EBS trading platform.

Support remained intact at its 200-day moving average, which
is now around $1.2826, but traded solidly below the 14-day
moving average, now at $1.2953.

Adding to the uncertainty weighing on the euro, a German
newspaper reported the European Central Bank and Germany’s
Bundesbank are having lawyers verify the legality of the ECB’s
new bond purchase program.

The uncertainty bolstered the safe-haven yen. The currency
could get a lift this week from Japanese fund repatriation ahead
of half-year book-closing, although some market participants
said many companies had already covered their needs so such
flows are unlikely to be significant.

Still, some investors still said the yen continued to have
the upper hand against its global counterparts.

“Selling and buying forces both lack strong momentum, but
the market is biased towards selling, with euro capped by its
own problems and the dollar also top-heavy against the yen,”
said Yuji Saito, director of foreign exchange at Credit Agricole
in Tokyo.

He said the euro could slip below 100 yen temporarily today
and the dollar could approach 77.50 yen but may rebound as heavy
bids are placed at 77.50 yen. Wariness that Japanese authorities
might intervene to stem any yen rise will also likely limit the
dollar’s drop against the yen, he added.

Against the yen, the euro slipped about 0.1
percent to 100.30 yen after falling to 100.17 yen on Tuesday,
its lowest level since Sept. 13.

The dollar bought 77.76 yen, not far from Tuesday’s
low of 77.65 yen, which was its lowest since Sept. 14.

The Australian dollar slipped 0.2 percent to $1.0363
, moving further away from a six-month high of $1.0625
reached on Sept 14.