Risk currencies bounced off multi-week lows but were still seen vulnerable, while the Japanese yen held firm on Wednesday, as doubts over whether Greece can pull together a bond swap deal prompted players to cut exposure to risky assets. Among the biggest casualties, the Australian dollar slid to a six-week low against the US dollar, dented also as the country's growth in October-December turned out to be lower than expected.
The euro plumbed a three-week low at $1.3103 on EBS late on Tuesday, but has managed to stay above solid supports around $1.31, including the cloud top of daily Ichimoku charts at $1.3097 and the 76.4 percent retracement of its rally in mid to late February at $1.3095. It bounced back in Asia to around $1.3147, up 0.2 percent from late US levels as the disappointing Australian data prompted unwinding of short positions against the Aussie, a popular trade this year.
The euro rose 0.2 percent to A$1.2455. It hit a record low around $1.2124 last month as investors sold the euro for the Aussie on the view that a high-yielding Aussie will benefit from a massive fund injection from the European Central Bank. The Aussie fell to a six-week low against the US dollar after disappointing Australian GDP data, shedding some 3 US cents from a seven-month high set just last week.
The Aussie touched a low of $1.0508, briefly breaking below a major support of $1.0525, before erasing losses to fetch $1.0560. A clean break of $1.0525 could pave the way for a move to the $1.0370-00 major pivot, traders said. The dollar fell as low as 80.56 yen, well down from a nine-month peak of 81.87 set earlier this month, although it handily held above a key support from 23.6 percent of its February rally at 80.50. It last stood at 80.80 yen.
Traders said a break above 81.60 is now needed to reset the upwards momentum for dollar/yen and put 82.20 back in focus. The euro also pulled further away from a recent high of 109.95 yen to stand at 106.25 yen. Renewed pressure on the single currency saw the dollar rise 0.7 percent against a basket of major currencies on Tuesday to its highest since February 16. The dollar index stood at 79.68 in Asia, not far from Tuesday's high of 79.867, and it now eyes a test of a very thin cloud on daily Ichimoku charts, a break above which could be considered as a major bull sign.
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