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FOREX-Euro wallows around one-week lows against dollar
September 26, 2012 / 12:16 AM / 5 years ago

FOREX-Euro wallows around one-week lows against dollar

* 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.

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