The euro rose against the dollar on Wednesday, edging closer to $1.50, with the US currency under renewed pressure on expectations that US interest rates will stay low in coming months. The euro was up 0.3 percent at $1.4870, with demand from Asian sovereigns as well as European real money interest boosting the single currency.
Traders cited talk of option barriers at $1.4950 and at $1.50 while large offers were said to be at $1.4930/35.
Traders said their order books were loaded with offers around $1.4880-1.4950, which would cap gains. They cited offers from a semi-official European name around $1.4870, adding that unless the euro fell past its Tuesday's low of around $1.4750, investors would not unwind their bullish bets on the euro.
One-month was trading around 11.25 percent versus 11.05 Tuesday, although risk-reversals remain biased for euro downside, with the one-month 25-delta at 1.05 in favour of euro puts, unchanged from Tuesday. The dollar slipped 0.2 percent versus a currency basket to 73.000. It hit 72.722 at the start of the month, its weakest since mid-2008.
Some gauges of market positioning suggest speculators and hedge funds have hefty short dollar positions against emerging Asian currencies and others including the Australian dollar, leaving open the possibility of more position unwinding and a further rebound in the US currency. But the dollar has been unable to build on short-covering support seen in past days, and given signals from the Federal Reserve that rates would stay long for a prolonged period, investors are likely to look for fresh selling opportunities.
The high-yielding Aussie was flat at $1.0830, easing from a session high of $1.0877, but well supported by Asian sovereign demand, traders said. The Aussie was picked up at dips, having suffered losses in the past few days after it and other commodity-based currencies took a hit from a drop in silver prices. The dollar was up slightly at 81.02 yen.
Comments
Comments are closed.