Categorized | Forex, Uncategorized

FOREX-Dollar stays off its post-Fed levels

FOREX-Dollar stays off its post-Fed levels

* Fed’s delayed rate-hike expectations help euro

* Some euro short positions remain – strategist

* Dollar faces tough resistance around 78.30 yen

* Aussie, kiwi retrace after hitting nearly 3-month highs

TOKYO, Jan 26 (Reuters) – The dollar steadied in Asian trade on Thursday, giving back some of its gains against the yen but paring losses against other rivals after a more dovish-than-expected outcome to the Federal Reserve’s latest meeting pressured it overnight.

Federal Reserve Chairman Ben Bernanke said the U.S. central bank might consider further monetary easing through bond purchases. The Fed also pushed back the likely timing of an eventual interest rate hike until late 2014, 18 months later than its previous expectations.

The dollar steadied at 77.76 yen, following its overnight rise to a two-month high of 78.28 yen on the EBS trading platform.

“After the Fed, the dollar will have a harder time continuing this week’s gains against the yen. The topside has gotten heavy,” said Teppei Ino, currency analyst at Bank of Tokyo-Mitsubishi UFJ.

Strong technical resistance was cited around 78.30 yen, with the 200-day moving average now at 78.33 yen. The 61.8 percent retracement of the pair’s October-January fall also lies at 78.31 yen, while support is seen at the long term trendline at 77.53 yen.

The dollar index eased slightly to 79.463, while the euro was nearly flat at $1.3105 after rising to a five-week high of $1.3120 overnight.

While the single currency’s rise has led many investors to cut back what had been significant short positions, some short positions remain.

“The euro could continue to make short-term gains as the remaining positions are covered, so its downside risks are low for now,” said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo.

But the euro faces upside challenges from remaining concerns about Europe’s ability to come to grips with its debt crisis, with any negative developments seen as giving investors an excuse to sell into short-squeeze rallies.

Greece remains in focus, as the top negotiator for private creditors is scheduled to return to Athens later on Thursday to resume talks with officials on a dept swap deal, as the clock ticks ahead of a March deadline when Greece faces major bond redemptions.

Against Japan’s currency, the euro changed hands at 101.91 yen, just shy of a fresh one-month high of 101.97 yen hit in early Asian trade, and moving further away from an 11-year low of 97.04 yen hit on Jan. 16.

Japanese exporters have set their euro rate targets at 105 yen, so many traders believe selling pressure would intensify ahead of that level.

“The euro’s gains against the yen are mostly a reflection of the influence of the dollar’s weakening against the euro, and the yen’s weakening against the dollar, rather than any fundamental move,” Bank of Tokyo-Mitsubishi UFJ’s Ino added.

Both the Australian dollar and its New Zealand counterpart retraced after touching their highest levels since Oct. 31.

With markets in Sydney closed for a holiday on Thursday, the Aussie bought $1.0603, down from its overnight peak of $1.0619. A test of the September and October highs in the 1.0750/65 area is possible, so the weekly Ichimoku cloud top at $1.0561 could offer an entry point.

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