Euro Hits Six-Week Trough on Lower ECB Loan Pay-Back
Some strategists said they expect the euro to grind lower ahead of the outcome of Italian elections, which is not expected until next week. But they added the currency should find support around $ 1.3040, near the Jan. 10 low of $ 1.3037.
Bob Lynch, chief currency strategist at HSBC in New York said technical factors also point to a weaker euro. “The downward shift in momentum indicators, the break below the July 2012 uptrend, and the further shift in relative yield spreads against the euro suggest to us that the risks remain on the downside in the near-term,” he said.
Against the yen, the euro rose 0.3 percent to 123.12 yen. The dollar rose 0.3 percent to 93.39 yen, not far from a 33-month high of 94.47 hit last week, but was on pace for a weekly loss of 0.3 percent.
Some market players said the fact U.S. policymakers had not particularly objected to yen weakness, which makes Japan’s exports more competitive relative to those of other countries, meant the downtrend could continue.
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“We didn’t really realize how aggressive the Japanese officials would get, and we also didn’t really sense the U.S. condoning it as much as they did,” said John Vail, chief global strategist at Nikko Asset Management. “It could be that they are quite willing to let the yen get to this level. My sense is that the 95-105 yen level is the intended range.”
The Australian dollar regained ground after hitting a four-month low of $ 1.0221 against a broadly stronger U.S. currency on Thursday. It was last up 0.8 percent at $ 1.0325.