* Euro stung by Ireland bank woes but still in uptrend
* Dollar falls vs yen on unexpected rise in jobless claims
* Dollar touches lowest against yen since BOJ intervention
(Recasts; adds comments, details; updates prices, changes
byline)
By Steven C. Johnson
NEW YORK, Sept 23 (Reuters) - The euro retreated from a
five-month high against the dollar on Thursday, hobbled by
worries about Ireland's economy and banks, while the yen hit
its lowest against the dollar since last week's intervention.
Data showing Ireland's economy shrank 1.2 percent in the
second quarter slowed the euro's upward momentum as it
highlighted the struggles the country faces as it tries to
shore up a troubled banking sector. For more see
[].
Selling from Asian accounts pushed the currency lower after
it broke $1.34 in Europe but on the charts it was still in an
uptrend, trading above its $1.3208 200-day moving average.
Support was seen around $1.3265 "and as long as we hold
above it we're probably taking a breather here and sooner or
later will have a go at yesterday's high" of $1.3440, said
Andrew Chaveriat, technical strategist at BNP Paribas in New
York.
While the euro looks overbought on a daily chart, Chaveriat
said the weekly chart is telling a different story, which could
provide the momentum to target $1.3510.
"Overbought signals on the daily chart may be scaring
short-term traders into taking some profits, but longer-term
traders don't seem too concerned yet," he said.
The euro was down 0.4 percent on the day at $1.3345 <EUR=>
after hitting a five month-high on Wednesday. It also slipped
0.7 percent to 84.99 pence <EURGBP=> against sterling and 0.5
percent to 112.61 yen <EURJPY=>.
The euro wobbled Thursday as uncertainty over the cost of
propping up Ireland's banking sector triggered concerns the
country is on the edge of a debt crisis that could drag down
other troubled euro zone economies. []
Pessimism about Ireland pushed yield spreads between
10-year government bonds in Ireland and Germany -- the most
economically sound euro zone country -- to their widest ever.
Data showing euro zone growth slowed in September also took
some of the shine off the euro. []
INTERVENTION WATCH
The dollar fell 0.2 percent to 84.38 yen <JPY=EBS> after
hitting 84.26, its lowest since the Bank of Japan intervened on
Sept. 15 to weaken the currency. The dollar was at a 15-year
low of 82.87 yen when Japan began selling yen.
"The yen would be a lot stronger if not for intervention
and the threat of intervention," said Lee Hardman, currency
economist at Bank of Tokyo-Mitsubishi UFJ.
"The drop in short-term U.S. yields is consistent with 80
yen rather than 85 yen," he said, adding Japanese authorities
would likely intervene again if the dollar fell below 83 yen.
Markets in Tokyo were closed for a national holiday but
Japanese Prime Minister Naoto Kan was to meet U.S. President
Barack Obama in New York on Thursday.
Obama will also meet Chinese Premier Wen Jiabao, who pushed
back against pressure to revalue the yuan as U.S. lawmakers
threatened to penalize China. []
If the Federal Reserve decides to pump billions more
dollars into the U.S. economy to boost a faltering recovery, a
possibility it hinted at this week, U.S. yields and the dollar
will likely fall further, making it tough for Japan to keep the
yen weak.
Analysts said that was also helping to keep the overall
atmosphere bullish for the euro and other currencies such as
the commodity-linked, growth-sensitive ones such as the
Australian dollar <AUD=> and Brazilian real <BRBY>.
Chaveriat said the Reuters/Jefferies CRB commodities index
<.CRB> has been testing resistance around 281, with any
sustained break a bullish sign for commodity currencies.
An unexpected rise in weekly first-time U.S. jobless
claims, meanwhile, added to the case for more Fed easing,
making it "hard to justify pushing the dollar much higher,"
said Matthew Strauss, strategist at RBC Capital Markets.
[]
(Additional reporting by Vivianne Rodrigues in New York and
Naomi Tajitsu in London; Editing by James Dalgleish)
