1 Middle East bids, fund repatriation support euro
2 Euro support near $1.3569, Ichimoku cloud bottom
3 Euro/yen hovers near critical support area
4 Dollar/yen spikes briefly on stops, large-lot flow
SINGAPORE, Nov 15 (Reuters) -
The euro dipped on Tuesday, stuck near the bottom of a recent trading range after a rise in Italian and Spanish bond yields underscored the challenges facing Europe as it tries to contain the region's debt crisis.
The dollar briefly spiked higher against the yen but later gave back most of its gains, and traders said the move was likely caused by a large-lot flow and stop-loss buying, and was probably not intervention.
The euro had gained some reprieve in recent sessions as a change in leadership in Italy and Greece eased worries of political uncertainty and stirred hopes for progress in tackling Europe's debt problems.
But such optimism was tempered when Italian and Spanish government bonds came under renewed selling pressure on Monday. A drop in European equities, including banking shares, also did the euro no favorite.
While day-to-day fluctuations in the euro and investor risk appetite are hard to predict, the single currency is likely to remain under pressure versus the dollar and the yen in coming weeks, said Junya Tanase, chief FX strategist for J.P. Morgan in Tokyo.
"There is no doubt that Europe is nowhere near a situation that can be viewed with optimism," Tanase said.
"The bias is toward risk-off with both the dollar and the yen rising, while cross/yen pairs including euro/yen are likely to come under downward pressure," he added.
The euro fell 0.1 percent to $1.3618, staying on the defensive after slipping 0.8 percent the previous day. The euro is now near the lower end of its trading band since late October of $1.3484 to $1.4248.
Possible support for the euro lies near $1.3569, the bottom of the cloud on the daily Ichimoku chart, a popular form of technical analysis.
While persistent worries over the euro zone's debt problems were likely to leave the euro vulnerable, one trader said the single currency was likely to be supported below $1.36 due to bids from Middle Eastern sovereign players and European players' fund repatriation ahead of their year-end book closings.
The single currency dipped 0.1 percent versus the yen to 104.97 yen, stuck near a one-month low around 104.74 yen hit last week.
Euro/yen is hovering near a critical support area of 104.70 yen to 104.90 yen, where a number of support levels are clustered. A 61.8 percent retracement of the euro's rally versus the yen in October stands near 104.90 yen, while its lows in the past few weeks converge around 104.70 to 104.80 yen.
A break below that support area could open way for a test of Ichimoku cloud bottom, which now comes in near 104.12 yen, said Teppei Ino, currency analyst at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
EUROPEAN BOND YIELDS
Yields at a 3 billion euro five-year Italian bond sale on Monday hit euro-era highs of 6.29 percent , just a day after former European Commissioner Mario Monti was named to lead the country -- a move that had been hoped would help restore investor confidence.
Italian bond yields rose in the secondary market after the auction, while the 10-year Spanish government bond yield climbed above 6 percent for the first time since August.
More euro zone debt auctions are coming this week, with Spain aiming to sell between 3 billion euros ($4.1 billion) and 4 billion euros of 10-year bonds on Thursday, while France will auction two-year notes on Thursday at a time its triple-A sovereign status is being put under scrutiny given the significant exposure of its banks to Italian, Spanish and Greek debt.
The dollar held steady against the yen at 77.09 yen.
Earlier, the dollar jumped around 40 pips to an intraday high of 77.51 yen. But it quickly gave back its gains, and the dollar is now back near Monday's two-week low around 76.82 yen, the lowest level since Japan's massive yen-selling intervention on Oct. 31.
Market players are bracing for the possibility of further yen-selling intervention, especially if the yen starts to rise sharply.
2 Euro support near $1.3569, Ichimoku cloud bottom
3 Euro/yen hovers near critical support area
4 Dollar/yen spikes briefly on stops, large-lot flow
SINGAPORE, Nov 15 (Reuters) -
The euro dipped on Tuesday, stuck near the bottom of a recent trading range after a rise in Italian and Spanish bond yields underscored the challenges facing Europe as it tries to contain the region's debt crisis.
The dollar briefly spiked higher against the yen but later gave back most of its gains, and traders said the move was likely caused by a large-lot flow and stop-loss buying, and was probably not intervention.
The euro had gained some reprieve in recent sessions as a change in leadership in Italy and Greece eased worries of political uncertainty and stirred hopes for progress in tackling Europe's debt problems.
But such optimism was tempered when Italian and Spanish government bonds came under renewed selling pressure on Monday. A drop in European equities, including banking shares, also did the euro no favorite.
While day-to-day fluctuations in the euro and investor risk appetite are hard to predict, the single currency is likely to remain under pressure versus the dollar and the yen in coming weeks, said Junya Tanase, chief FX strategist for J.P. Morgan in Tokyo.
"There is no doubt that Europe is nowhere near a situation that can be viewed with optimism," Tanase said.
"The bias is toward risk-off with both the dollar and the yen rising, while cross/yen pairs including euro/yen are likely to come under downward pressure," he added.
The euro fell 0.1 percent to $1.3618, staying on the defensive after slipping 0.8 percent the previous day. The euro is now near the lower end of its trading band since late October of $1.3484 to $1.4248.
Possible support for the euro lies near $1.3569, the bottom of the cloud on the daily Ichimoku chart, a popular form of technical analysis.
While persistent worries over the euro zone's debt problems were likely to leave the euro vulnerable, one trader said the single currency was likely to be supported below $1.36 due to bids from Middle Eastern sovereign players and European players' fund repatriation ahead of their year-end book closings.
The single currency dipped 0.1 percent versus the yen to 104.97 yen, stuck near a one-month low around 104.74 yen hit last week.
Euro/yen is hovering near a critical support area of 104.70 yen to 104.90 yen, where a number of support levels are clustered. A 61.8 percent retracement of the euro's rally versus the yen in October stands near 104.90 yen, while its lows in the past few weeks converge around 104.70 to 104.80 yen.
A break below that support area could open way for a test of Ichimoku cloud bottom, which now comes in near 104.12 yen, said Teppei Ino, currency analyst at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
EUROPEAN BOND YIELDS
Yields at a 3 billion euro five-year Italian bond sale on Monday hit euro-era highs of 6.29 percent , just a day after former European Commissioner Mario Monti was named to lead the country -- a move that had been hoped would help restore investor confidence.
Italian bond yields rose in the secondary market after the auction, while the 10-year Spanish government bond yield climbed above 6 percent for the first time since August.
More euro zone debt auctions are coming this week, with Spain aiming to sell between 3 billion euros ($4.1 billion) and 4 billion euros of 10-year bonds on Thursday, while France will auction two-year notes on Thursday at a time its triple-A sovereign status is being put under scrutiny given the significant exposure of its banks to Italian, Spanish and Greek debt.
The dollar held steady against the yen at 77.09 yen.
Earlier, the dollar jumped around 40 pips to an intraday high of 77.51 yen. But it quickly gave back its gains, and the dollar is now back near Monday's two-week low around 76.82 yen, the lowest level since Japan's massive yen-selling intervention on Oct. 31.
Market players are bracing for the possibility of further yen-selling intervention, especially if the yen starts to rise sharply.
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