* US dollar shorts largest since at least mid-2008
* G7/IMF meetings fail to reach agreement on currencies
* Dollar hits 15-year low vs yen but steadies around 82.00
(Updates prices)
NEW YORK, Oct 11 (Reuters) - The U.S. dollar rallied
against the euro and yen on Monday in holiday-thinned trading
as investors bet that the greenback's recent declines were too
far, too fast.
Sentiment toward the dollar remained broadly bearish,
however, as the Federal Reserve looked set to pump more cash
into the economy after a weekend meeting of finance leaders
produced no quick fix for tensions in currency markets.
The euro had earlier climbed as high as $1.4012 on
electronic trading platform EBS, but it lost momentum after
failing to hold above the $1.40 area for a second time since
hitting a 8-1/2 month high of $1.4030 last Thursday.
"Clearly, $1.40 has been a pretty big resistance level for
euro/dollar. The market is looking for any kind of excuse to
sell euro/dollar for the time being," said Boris Schlossberg,
director of currency research at GFT in New York.
"While the fundamentals are still very dollar bearish, the
positioning is actually dollar bullish. At this point, the
positioning is going to matter more than the fundamentals in
terms of driving trade," he added.
Currency speculators boosted bets against the dollar to $30
billion in the latest week, the largest amount since at least
mid-2008, data from the Commodity Futures Trading Commission
showed. Net long positions on the euro rose to 48,243
contracts, the highest since at least October 2009. For
details, see []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on FX positioning http://r.reuters.com/kus26k
Graphic on trade-weighted FX moves since 2007
http://r.reuters.com/qun86p
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The euro fell as low as $1.3866 on EBS and was last down
0.4 percent at $1.3887 <EUR=>, well below a high of $1.4012 hit
earlier in the global session.
The pair remains above its 55-week moving average, which is
near $1.3590, suggesting "the medium term uptrend is still in
place," strategists at Citigroup wrote in a note.
Traders saw support in the $1.3750-$1.3690 area with
resistance at around $1.4216, a level which acted as support on
Dec. 22, when the euro was declining.
The next key level is at about $1.4372, the 76.4 percent
retracement of the euro's fall from November to June.
G7, FED COMMENTS
The dollar sank to a 15-year low of 81.37 yen on EBS
<JPY=EBS><JPY=> in Asian trade but recovered to last trade 0.2
percent higher at 82.02 yen.
Thin market liquidity because of public holidays in the
United States and Japan exacerbated price moves.
The risk of another round of intervention to weaken the yen
seemed to have grown after Japan weathered the flurry of
weekend G7 and IMF meetings with hardly any criticism of its
recent yen sales, but there was no sign of action on Monday.
Traders said the next focus would be on minutes from the
Federal Reserve's September policy meeting, due out on Tuesday,
for fresh insight into the central bank's thinking on further
monetary easing.
A round of speeches this week by Fed officials, including
Chairman Ben Bernanke, could also shed light on policymaker's
views on the economy and monetary policy.
"Market expectations for quantitative easing in November
are very high and very strong," said Nick Bennenbroek, head of
currency strategy at Wells Fargo. "If Bernanke doesn't do
anything to dissuade those market expectations, then the dollar
will probably move a little lower."
With the IMF's failure to reach an accord on currencies,
analysts said the way is now clear for the Fed to resort to
even more stimulus next month, though investors are still
debating the size and scope of the move.
The IMF last week ratcheted down expectations for the
United States but still forecast U.S economic growth at 2.6
percent in 2010 and 2.3 percent in 2011 compared with 1.7
percent and 1.5 percent for those periods in the euro zone.
[].
The dollar rose 0.2 percent against a basket of currencies
<.DXY> to 77.442, not far from a nine-month low of 76.906 hit
on Thursday.
(Reporting by Nick Olivari and Wanfeng Zhou; Editing by
Padraic Cassidy)
