* Euro tests $1.3600 support, talk of barriers, trade whippy
* Remains under pressure as long positions cleared
* Ireland remains in spotlight, G20 not seen conclusive
* Dollar's rise blocked at 82.50 yen area
By Ian Chua and Chikafumi Hodo
SYDNEY/TOKYO, Nov 12 (Reuters) - The euro hit six-week lows
on the dollar on Friday, threatening support at $1.3600 as
investors closed long positions and as renewed concerns about
Ireland's ability to pay its debt kept up selling pressure.
The euro, which fell nearly 1 percent on Thursday, has shed
about 2.6 percent this week as long positions built up into the
Federal Reserve's bond buying decision last week have been
unwound heading into the year-end book-closing season.
On the charts it has support at $1.3558 and then $1.3532, its
55-day moving average. Liquidity is thinning out and the market
has been whippy as investors have liquidated longs.
Traders are watching G20 leaders meeting in Seoul as they
labour to tackle currency strains, but they were expected to
agree just indicative guidelines on global imbalances and leave
the details until next year, sources said. []
The single currency dipped as far as $1.3601 <EUR=>, where
its bounce from that level prompted talk of options barriers, and
the dollar index, a measure of its performance against six
currencies, tested significant resistance at an October high.
"Sentiment for the euro turned even weaker after breaking
below $1.37," said Tsutomu Soma, senior manager at Okasan
Securities' foreign securities section.
"In general, the market is keen to cover the dollar (short)
positions due to growing concerns over debt problems in Ireland
and other European countries."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
G20 Take a Look []
Multimedia PDFs>>
G20 battle lines: http://r.reuters.com/jux34q
Basel III: http://r.reuters.com/zys68p
The Fed's gamble: http://r.reuters.com/cyh73q
Graphics>>
Ireland's bailout challenge: http://r.reuters.com/wuv48p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The 10-year Irish government bond yield <IE10YT=TWEB> has
rocketed to 9 percent, from as low as 4.4 percent earlier this
year, making it the second highest yielding euro zone bond
after Greece's 11.7 percent. The bid/ask yield spread for Irish
debt has also blown out, suggesting the market is
freezing up.
Two thirds of economists and bond strategists polled by
Reuters on Thursday believe Ireland will seek international
rescue funds before the end of next year. []
German Chancellor Angela Merkel said the European Union was
ready to deal with all scenarios in the Irish financial crisis.
All this was likely to keep pressure on the single currency,
dealers said. It fell 0.3 percent on the day to $1.3621, 0.4
percent to 112.30 yen <EURJPY=R>, and hit a record low against
the Australian dollar <EURAUD=R> around $1.3640. Against the
pound, it was down at 7-week lows around 84.50 pence <EURGBP=D4>.
The dollar, in a decline for weeks in anticipation of more
quantitative easing from the Fed, has benefited as months-old
short positions unwind.
Against a basket of major currencies <.DXY><=USD>, the
greenback has risen 3.5 percent from a near one-year low set last
week and was last at 78.27 after faltering at resistance around
78.36. If it can take that level out, chartists note resistance
from its 50-day moving average currently at 78.70.
The dollar bought 82.40 yen <JPY=>, little changed from
late New York levels. It has recovered from a 15-year low of
80.21 yen at the start of the month to 82.80 yen this week but
traders say sell orders from players such as Japanese exporters
are lined up between 82.50-83.00 yen.
On the charts, the dollar's 55-day moving average comes in at
82.87 yen and chartists note it has not traded above that average
since June, when it peaked above that level for two sessions.
That is also its Sept. 15 pre-intervention low of 82.87 yen.
The euro zone debt woes also curbed appetite for risk
assets, sending global equity markets lower <.MIWD00000PUS> and
taking a toll on commodity currencies.
The Australian dollar <AUD=D4> slid below parity against
the greenback to trade at $0.9957. Stops were seen below $0.9950,
which could take the Aussie towards $0.9900 in the short term.
"It just feels a little tired and there is a little bit of
nervousness about a bit more of a substantial clean-out in
Aussie downside," said Grant Turley, strategist at ANZ.
Some analysts say however the dollar is still likely to be
hampered by the fact that the Fed has committed to injecting more
stimulus into the economy, effectively keeping U.S. rates
low and making the dollar an attractive funding currency.
(Additional reporting by Hideyuki Sano and Charlotte Cooper in
Tokyo, and Reuters FX analyst Krishna Kumar in Sydney; Editing by
Joseph Radford)
