* Dollar rises broadly, boosted by data, higher yields
* Higher yields seen favoring dollar vs yen
* Doubts over policy for euro zone crisis dent sentiment
(Recasts; updates prices, adds quotes, details, changes
byline)
By Julie Haviv
NEW YORK, Feb 10 (Reuters) - The dollar rallied against
rival currencies on Thursday after a fall in U.S. jobless
claims with more gains seen against the euro on concerns about
Europe's lack of progress tackling its debt crisis.
The dollar rose for a seventh straight day against the yen.
The Swiss franc <CHF=EBS> fell as safe-haven demand faded on
reports Egyptian President Hosni Mubarak looked likely to step
down. The news pushed the greenback to a one-month high. For
details, see []
Traders said a recent spike in U.S. yields may prompt
further dollar gains in the days ahead.
"I think this can continue as the run-up in yields is
dollar-supportive, and now we're encountering a renewed sense
of fear about euro zone debt issues," said Brian Dolan, chief
strategist at Forex.com in Bedminster, New Jersey.
U.S. Treasury debt slightly trimmed price losses
immediately after the Treasury sold $16 billion of 30-year
Treasury bonds. []
Dolan said the euro would likely have to break $1.3450
before "people start targeting $1.30 in the weeks ahead."
The euro hit a $1.3578 session low, with support seen at
$1.3541, the 100-day moving average. It pared losses by early
afternoon in New York and was last down 0.9 percent at $1.3603
<EUR=>.
While price action pressured it back toward the $1.36, it
is still above the widely perceived pivotal level of $1.35.
One-month implied options volatility fell to a five-month
low, however, suggesting the scope of subsequent moves may be
limited for now. <EUR1MO=>
The dollar was up for a seventh straight session against
the yen, nearing a one-month high at 83.29 yen <JPY=EBS> before
easing to 83.21 yen, up 1.0 percent. Traders expect higher U.S.
yields to pull capital out of Japan, and Dolan said the pair
could soon reach the high 80s, an area last seen in July.
"There are indications that the Japanese capital flow
picture is changing in a direction consistent with yen
weakening," said Jens Nordvig, global head of G10 FX strategy
at Nomura Securities International.
"We are looking for opportunities to go long dollar-yen."
The currency pair had breached 82.93, its Jan. 28 high, and
there were large stops at above 82.90 and 83.00. The break
above the Ichimoku "Cloud" put the technical bias to the
upside, a trader said.
Sterling, meanwhile, fell as low as $1.6011 <GBP=D4>
overnight after the Bank of England left interest rates at
record lows despite chatter about a possible hike, though it
recovered by midday in New York to trade nearly unchanged at
$1.6098. []
U.S. JOBLESS CLAIMS FALL
U.S. growth picked up in late 2010 and expectations of even
brisker expansion this year have driven up bond yields to about
nine-month highs, though the U.S. Federal Reserve has failed to
signal plans to cut short a $600 billion bond-buying program.
Adding to the optimism, U.S. claims for first-time jobless
benefits fell more than expected in the latest week to a
2-1/2-year low, data showed. []
The euro, which hit a 12-week high above $1.38 earlier this
month, struggled as investors drove Portuguese bond yields to
their highest level since the currency was introduced in 1999.
Portugal is considered at risk of becoming the next euro
zone country to need a bailout. European leaders will meet next
month to discuss bolstering a 440-billion euro bailout fund.
Traders said the European Central Bank (ECB) helped stem
the rise in yields through direct bond purchases.
[]
The U.S. economy appears to be gathering some momentum and
many strategists see limited upside for the euro in the
near-term, especially if U.S. data continues to show more
decisive improvement.
The recent pullback stalled right against congestive
support at $1.3498, according to RBC Capital Markets.
The $1.3498 level will have to be taken out in order to
sustain a deeper pullback that would expose secondary supports
at $1.3246 and $1.3015, the bank said.
(Additional reporting by Steven C. Johnson; Editing by Andrew
Hay)
