* Dollar sells off vs euro on Fed statement
* Dollar falls below 85 yen
(Recasts, adds details and quotes; updates prices)
NEW YORK, Sept 21 (Reuters) - The euro rallied more than 1
percent against the dollar on Tuesday, rising to a six-week
high after the Federal Reserve said it stood ready to provide
additional support to bolster a modest economic recovery.
The dollar also fell below 85 yen as investors fled the
greenback.
The Fed statement suggested the U.S. central bank may be
preparing to do more to keep unemployment from rising and
prices from falling. The sentiment confirmed investors' fears
ahead of the meeting.
The Fed made no shift in monetary policy at the end of a
one-day meeting, although it expressed somewhat greater concern
about the sluggish pace of economic growth and uncomfortably
low inflation than it had when it last met in August. For more,
see: [].
"Bottom line, the Fed may have to do more in terms of
stimulus before the end of the year and that is obviously
pushing yields lower," said Joe Manimbo, currency trader at
Travelex Global Business Payments in Washington. "In turn it
makes returns on dollar-denominated assets even less
attractive."
In mid-afternoon trading in New York, the euro was up 1.4
percent at $1.3246 <EUR=> after climbing as high as 1.3281, its
highest since Aug. 9, according to Reuters data.
As long as the euro holds above the $1.3030 area, some
technical analysts see its Aug. 6 high of $1.3334 on EBS as an
upside target. The high according to Reuters data that day was
$1.3333.
The euro also breached technical resistance at its 200-day
simple moving average, which came in at $1.3218 at current
prices.
Long-term moving averages are stronger resistance levels in
this instance. Once breached, the new level would become
long-term support for the currency.
The 14-day simple moving average crossed the 50-day simple
moving average, using Reuters analytics, which is also bullish
for the euro in the near term,
"It seems that the U.S. economy is at that point where the
Fed is actually closer to easing monetary policy," said Nick
Bennenbroek, head of FX strategy at Wells Fargo in New York.
"So we have seen the dollar sell off against the euro."
INTERVENTION FEARS
The Fed statement also sent the dollar lower against the
yen, at one point pushing it below 85 yen after breaking
through stop-loss orders around 85.20 yen .
The dollar was last 0.4 percent lower at 85.35 yen <JPY=>.
It fell to 84.97 yen on EBS <JPY=EBS> and 84.99 yen on Reuters
data.
The dollar has failed to climb above its post-intervention
high of 85.94 yen set last Friday on the EBS trading platform,
capped by Japanese exporters selling ahead of their half-year
book-closing on Sept. 30.
Some analysts do not rule out another push by Japanese
authorities to push the greenback above 86 yen. Many had
doubted they would let the dollar fall below 85.00.
(Reporting by Nick Olivari; Additional reporting by Gertrude
Chavez-Dreyfuss and Vivianne Rodrigues; Editing by Dan
Grebler)
