* Euro rises but resistance near $1.2675
* Banks stress tests eyed in Europe
* Charts suggest possible rise to $1.28 near term
(Updates prices, adds details, changes byline)
By Nick Olivari
NEW YORK, July 7 (Reuters) - The euro rose against the
dollar on Wednesday in technical trading after breaking through
resistance levels, which prompted some investors who had bet
against the single currency to buy to prevent losses.
Concerns about the growth outlook for the global economy
and plans to test the financial health of European banks had
weighed on the euro for most of the session.
European regulators on Wednesday haggled over what details
to reveal about stress tests of about 100 banks in a dispute
that could undermine confidence in the health checks on the
region's lenders. For more details see []
But the euro/dollar broke through technical resistance
around 1.2610, said Kathy Lien, director of research at GFT
Forex in New York.
"When it broke through that, it broke higher and from this
position there is no major resistance until 1.2676, the May
high," Lien said.
Last week's data on euro/dollar short positions also
indicated there was only a small decline in euro short
positions, Lien said, which means there was still a lot of
opportunity for a short squeeze in the euro/dollar.
Investors who bet against a currency are often forced to
buy the currency to prevent losses if the currency actually
gains.
The euro was last at $1.2645, up 0.2 percent on the
day<EUR=>, even after worse-than-expected data showed factory
orders in Germany, the euro zone's largest economy, fell for
the first time this year in May. []
The euro rose to $1.2663 on trading platform EBS on
Tuesday, its highest level in about seven weeks.
The euro gained support earlier this week after a solid
Spanish syndicated debt sale on Tuesday eased euro zone debt
fears and weak U.S. data hit the dollar.
Analysts said the single currency could rise further in the
short term as a raft of weak U.S. data prompts investors to
unwind long dollar positions and short euro positions built up
since the start of the year.
German Chancellor Angela Merkel said on Wednesday the euro
has stabilized and should be on a stronger foundation than
before the Greek crisis thanks to debt-reduction measures being
implemented in the euro-zone. [].
Still, most analysts in a Reuters poll believe the euro
will stay weak against the dollar over the coming year. The
survey of about 60 analysts, taken July 2-7, predicted the euro
would fall to $1.24 in one month and $1.20 in three months,
then to $1.18 in six months and in mid-2011.[]
"The euro remains vulnerable to another downturn as
investors begin to look to the 16-member bloc's growth
prospects amid a back drop of strict budget cuts and the
potential for another downturn in the global economy," said
Omer Esiner, a chief market analyst at Commonwealth Foreign
Exchange in Washington, D.C.
The dollar fell 0.3 percent to 87.32 yen <JPY=>, not far
from a seven-month low of 86.96 yen hit on EBS last week
<JPY=EBS>.
(Reporting by Nick Olivari; Additional reporting by Vivianne
Rodrigues; Editing by Kenneth Barry)
