* Dollar fails at 82 yen but U.S. yields still support
* Euro support at $1.3735 holds, rebounds but soft
* NZD hit by dovish central bank comments
* BoE inflation report key for sterling
By Ian Chua and Charlotte Cooper
SYDNEY/TOKYO, Nov 10 (Reuters) - The dollar's sharp rebound
hit turbulence on Wednesday, with the currency faltering near
significant chart resistance levels and with precious metals,
which had fallen sharply and given it a boost, starting to
recover.
The euro, which lost 1 percent on Tuesday as euro zone debt
concerns pressured it, twice bounced off support at $1.3735 in
choppy trade although its recovery was limited.
The dollar also failed to push through a significant barrier
at 82.00 yen. One dealer said the greenback ran into selling by a
short-term player as it neared 82.00 yen, with Japanese exporter
sell orders lined up at that level and above also expected to
prove a hurdle to its rebound.
Still, the dollar has recovered close to important chart
levels which could indicate a sharper comeback if they give way.
The euro has key support at $1.3700, with a break there opening
up the possibility of a test down to $1.3365 <EUR=>.
"If you look at the last few days, the dollar has gained some
traction," said Mitul Kotecha, global head of FX strategy at
Credit Agricole CIB in Hong Kong.
"It seems like a credible bounce back. I don't see it going
too far but it shows you how short the market was."
Longer-dated U.S. Treasury bond yields jumped on Tuesday and
the market will be watching an auction of 30-year debt later on
Wednesday to see if demand is lean.
"The ultimate theme of the market is U.S. interest rates,"
said a trader at a Japanese bank. "If U.S. bond yields rise
further after today's auction the dollar could see more upside."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
G20 battle lines: http://r.reuters.com/jux34q
Basel III; rule reshaping: http://r.reuters.com/zys68p
Gold price performance: http://link.reuters.com/juz44q
Greek, Irish bond yield spread: http://r.reuters.com/tuk54q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The dollar index <.DXY>, which tracks the greenback's
performance against a basket of major currencies, rose as high as
77.88 -- a level not seen since Oct. 28.
It was last at 77.80 and faces major resistance in the
78.27-36 band, where a break would signal its fall has bottomed
out at least for the near term. Support lies at 77.30-40.
The euro fell as low as $1.3735 <EUR=>, down almost 4
percent from last week's peak around $1.4283. It edged back to
$1.3775, flat on the day in highly choppy trading which also saw
it gain as far as $1.3794.
A near-term risk for the euro is a Portuguese government bond
auction later on Wednesday.
Portugal, seen by markets as a possible candidate for a
Greek-style bailout, is scheduled to sell up to 1.25 billion
euros ($1.72 billion) of government debt. []
The premium investors demand to hold Irish and Portuguese
debt over benchmark German bunds has blown out to euro lifetime
highs and traders said the European Central Bank was again
forced to step in to calm the market.
"The euro chart is not looking pretty. A rise in U.S. yields
is undermining the euro and now we have Ireland and Portugal
issues. The euro does not have positive factors on its own," the
Japanese bank trader said.
Part of the dollar's climb on Tuesday came from a vicious
reversal in silver <XAG=>, which rippled through the commodity
sector []. Investors have been borrowing in dollars
to fund leveraged positions and the pullback in prices forced
some to liquidate positions and buy back the currency.
Gold and silver were both edging up on Wednesday.
The dollar ticked up 0.1 percent against the Japanese yen,
though it is facing major resistance at 82 yen. It rose to 81.98
yen on Tuesday -- the highest in nearly two weeks.
The Aussie, which briefly dipped below parity on Tuesday,
stood flat at $1.0041 <AUD=D4>, down about 1.5 percent from a
28-year peak above $1.0180 set this month.
The New Zealand dollar <NZD=D4>, which fell 1.3 percent on
Tuesday, recovered from losses following dovish comments by
Reserve Bank of New Zealand Governor Alan Bollard, who said the
strength of the local dollar could limit future interest rate
rises. []
The NZ dollar climbed 0.3 percent to $0.7795 <NZD=D4>, though
it is still down more than 2 percent from a 31-month high
near $0.7980 set last week. []
Earlier it was also hit by by media reports of a U.S. ban on
New Zealand's kiwi fruit vines.
A move by a Chinese credit ratings agency to cut the U.S.
sovereign credit rating underscored growing tension between
Beijing and Washington over economic policy ahead of a Group of
20 leaders summit on Thursday and Friday in Seoul.
Sterling was steady <GBP=D4> after breaching support at
$1.6000 to stand at $1.5984. Sterling's near-term fortunes hinge
on a Bank of England inflation report due at 1030 GMT.
Markets are still betting the central bank may eventually
expand its 200 billion pound ($320 billion) asset purchase
programme, although recently firm data has reduced expectations
of such a move. []
($1=.7270 Euro; $1=.6253 Pound)
(Additional reporting by Hideyuki Sano and contributions by
Reuters FX analysts Krishna Kumar in Sydney and Rick Lloyd in
Singapore; Editing by Joseph Radford)
