* Euro hits 15-month high of $1.4521 on EBS
* Dollar/yen, cross/yen regain some ground after sell-off
* Yen pressured as short-covering and profit-taking fade
(Adds detail, updates prices)
By Jessica Mortimer
LONDON, April 13 (Reuters) - The euro edged to a 15-month
high against the dollar while the yen slipped broadly on
Wednesday as a bout of global risk reduction abated and
investors sought currencies promising higher yield.
The euro was lifted by reported demand from sovereign names
looking to recycle dollar proceeds as the single currency
remained supported by the prospect of further rate rises in the
euro zone while policy stays loose in the United States and
Japan.
The European Central Bank's increase of interest rates last
week should not be considered as an isolated decision and the
ECB president has signalled that it was not a one-off, ECB
Governing Council member Luc Coene said on Wednesday.
[]
"Some positioning indicators are pointing at an aggressive
pick-up in euro long positions. What started as a
sovereign-driven dollar recycling move seems to be gaining
traction," said Valentin Marinov, currency strategist at Citi.
"But we could see a shift if positioning starts to look
stretched in the near term and given that a lot of the positives
for the euro are already in the price".
Commodity-linked currencies such as the Australian and New
Zealand dollars also rose, buoyed by a recovery in commodity
prices and stocks, while the yen -- the most popular funding
currency to buy higher-yielding assets, the process known as
carry trades -- retreated after gaining on Tuesday.
The euro <EUR=> was up 0.1 percent at $1.4506, having
earlier hit $1.4521 on EBS trading platform, narrowly surpassing
Tuesday's $1.4520 high. Its gains were slowed by persistent
option-related offers. Traders said a barrier at $1.4530 was
being defended, expiring on Friday. A break above there would
target the 2010 highs around $1.4582.
Technical analysts said the uptrend remained intact while
the currency is above $1.4250/80 -- the area from which the euro
bounced towards its current highs -- while a sustained break
above $1.4600 could open up the path for a test of $1.500.
Against the yen, the euro was up 0.7 percent on the day at
121.91 yen <EURJPY=R>, though it stayed well below an 11-month
high of 123.33 yen hit on Monday.
"If there is no pullback in oil and other commodity prices
then I think going forward the yen will be very vulnerable,"
said Niels Christensen, currency strategist at Nordea in
Copenhagen.
YEN FALLS
The yen's downtrend was seen staying intact as long as risk
appetite holds up. The negative impact on the economy of the
recent massive earthquake was expected to ensure Japanese
monetary policy remains ultra-loose for a prolonged period.
The Japanese government's downgrading of its assessment of
the economy for the first time in six months added weight to
this view. []
The dollar <JPY=> was up 0.5 percent at 84.07 yen <JPY=>
after sliding more than 1.2 percent on Tuesday for its biggest
one-day percentage drop in four months.
Global equities and commodities recovered on Wednesday from
falls the previous day, when an upgrade of the severity of
Japan's nuclear crisis turned investors more risk-averse,
prompting them to unwind some of their recent yen-funded carry
trades.
"This selling-off has provided the opportunity to buy
USD/JPY but caution is advised as risk sentiment does remain
fragile," said a Tokyo-based trader, adding he saw a range of
83.00-86.00 yen.
The dollar continued to be supported by its 200-day moving
average -- currently around 83.46 yen -- having bounced off that
level on Tuesday. More support lies at 83.34 yen, the 23.6
percent retracement of the dollar's mid-March to April rally,
and 83.30 yen, the dollar's March 11 intraday high.
Short-term resistance lies at 84.33 yen, the conversion line
on the daily Ichimoku chart, a form of Japanese technical
analysis widely used among market players. Reported option
expiries at 83.20, 83.90, 84.00, 84.50 and 85.00 yen also
pointed to dollar/yen being trapped in a range.
The Australian dollar was up 0.5 percent at $1.0493 <AUD=D4>
to come closer to its recent 29-year high of $1.0585. It was up
more than 1 percent versus the yen <AUDJPY=R> at 88.19 yen,
regaining ground after a 1.8 percent slide on Tuesday.
(Additional reporting by Neal Armstrong, editing by Stephen
Nisbet)
