The euro rose on Wednesday as short covering and buying by macro funds kicked in following a steep fall in the dollar versus some Asian currencies after Japan and South Korea agreed to bolster their currency swap arrangements in a bid to help ease market tension.
A more than five-fold expansion of the swap arrangements will lift the amount of foreign currency that South Korea can immediately mobilise in case of emergency to more than $370 billion. The decision prompted unloading of the dollar by offshore funds, which spilled over into other dollar/Asia pairs with the euro and Australian dollar also gaining against the greenback.
"The swap deal triggered a sharp fall in the dollar versus the won and short-covering in the euro and the Aussie followed," said a senior spot trader for a major Japanese bank. Talk of bids looming at $1.3650-$1.3700 and a large euro purchase by a leveraged fund in New York hours also provided support to the euro, which last traded up 0.5 percent at $1.3824, piercing the top of the Ichimoku cloud on its hourly charts at $1.3819.
The euro faced resistance at Monday's one-month high around$1.3915 and then near its 55-day moving average of $1.3931.
Immediate support for the euro lies in the $1.3661-$1.3652 area, where it marked overnight lows on its hourly chart, and then at $1.3624 - the 38.2 percent retracement of its rally from a low at $1.3145 hit on October 4 to Monday's peak. Against the yen, the euro was at 106.13 yen, off a five-week high hit on Monday at 107.68 yen. The dollar index fell 0.5 percent to 76.771. But trapped between bids around 76.65 yen and offers at 76.85 yen, the greenback was stuck in a well-worn range, last changing hands down 0.1 percent at 76.74 yen. It was not far from the all-time low of 75.94 yen hit in August.
Comments
Comments are closed.