* Euro hits 6-mth high $1.3261, dollar falls broadly
* Dlr index hits weakest since April, dlr/yen at 8-mth low
* U.S. currency smacked by low U.S. rate view, tech factors
(Adds detail, updates prices)
By Naomi Tajitsu
LONDON, Aug 3 (Reuters) - The dollar hit multi-month lows
against major currencies on Tuesday, hit by signs of mounting
concern among U.S. policymakers about the pace of economic
recovery, as technical factors kept the currency under selling
pressure.
The dollar index, a measure of its value against a currency
basket, fell to 80.470, its weakest since mid-April and marking
its first break since January below its 200-day moving average,
a move that analysts said would open the door to more losses.
The euro hit a six-month high of $1.3261 according to
Reuters data, while the dollar fell to 85.73 yen, its weakest
since November 2009.
Negative sentiment for the U.S. currency grew after Federal
Reserve Chairman Ben Bernanke said on Monday that the economy
has yet to recover fully and monetary policy must remain
accommodative. []
Also stinging the dollar was the two-year U.S. Treasury
yield's drop to a record low of 0.534 percent. <US2YT=RR>
"The jury is still out on the U.S. recovery in Q2, Q3 and
Q4, but the market is taking the more pessimistic view," said
Kenneth Broux, market strategist at Lloyds TSB.
The greenback has slid over the past month after a run of
disappointing U.S. data fuelled expectations that U.S. growth
could lose momentum as official stimulus is withdrawn.
The Wall Street Journal on Tuesday reported that, given
signs the economy is losing momentum, Fed officials will mull
whether to use cash the central bank receives from maturing
mortgage bond holdings to buy new mortgage or Treasury bonds,
rather than allowing its portfolio to shrink gradually.
[]
By 1102 GMT, the dollar index <.DXY> traded at 80.481, down
0.6 percent on the day, after breaking below its 200-day moving
average at 80.722.
Analysts said the break of the 200-day mark would be the
trigger for momentum funds to sell dollars.
The euro <EUR=> traded 0.5 percent higher at $1.3244, with
traders highlighting options expiring at $1.3250 at 1400 GMT on
Tuesday and Wednesday, while the U.S. currency was 0.8 percent
lower at 85.79 yen.
Japanese Finance Minister Yoshihiko Noda said on Tuesday
that excessive, disorderly moves in the foreign exchange market
were undesirable and that too strong a yen hurts exports and
households, while Prime Minister Naoto Kan said he was carefully
watching economic moves. [] []
AUSSIE TRIMS LOSSES
Technical analysts said the euro's break above the 38.2
percent retracement of its decline from November to June at
$1.3125 on Monday was adding to upward momentum. The 50 percent
retracement was now a technical target at $1.3510.
"We've broken levels that should have held if we were to be
trending south in euro/dollar," said Dag Muller, technical
strategist at SEB in Stockholm, adding he saw a climb to $1.33
in the near term.
The Australian dollar <AUD=D4> traded at $0.9117, down 0.2
percent on the day but trimming losses made after retail sales
and building approvals data in Australia disappointed bulls. The
RBA held its benchmark interest rate at 4.5 percent, as widely
expected [] [].
(Additional reporting by Neal Armstrong, Editing by Andrew
Heavens, John Stonestreet)
