NEW YORK, Jan 24 (Reuters) - The euro rose for
a fifth straight session on Monday, hitting a two-
month high near $1.37 as expectations of higher
euro zone interest rates sparked traders to push
the currency above important technical levels.
Political turmoil in Ireland again highlighted
problems in indebted euro zone countries and a
suicide bombing at Russia's biggest airport
capped the European currency's rise.
But the euro gained momentum in the New York
session, and traders said tough talk on inflation
from European Central Bank President Jean-
Claude Trichet on Sunday was a catalyst driving
it to its highest level since November.
[ID:nLDE70M0GT]
"They are closer to tightening in the euro zone
with a lot less spare capacity, and it is realistic to
expect the ECB to tighten before the Federal
Reserve," said Kathy Lien, director of research at
GFT Forex in New York.
The euro EUR=EBS was up 0.3 percent on the
day at $1.3655 on electronic trading platform
EBS, after climbing as high as $1.3683, its highest
since November. Euro gains accelerated after
automatic buy orders were triggered at $1.3615
to $1.3620 were breached. Traders said $1.3695,
the Oct. 20 low, was the next upside target.
Solid data on euro zone industrial orders and a
robust euro zone flash estimate of services
purchasing managers activity also bolstered the
currency. [ID:nSLALCE7NA] [ID:nBRLOCE7AH]
The dollar fell 0.3 percent to 82.38 yen JPY=EBS
while the euro was unchanged at 112.50 yen
EURJPY=EBS, just off a two-month high hit in
earlier trade and not far from its 200-day
moving average.
EURO STILL FACES HURDLES
The euro has rallied some 6 percent in the past
two weeks, aided by increasing international
support for the euro zone's debt rescue plan and
concerns that higher inflation will prompt a rate
rise this year.
The spread between euro zone and U.S. bond
yields has widened as a result and boosted the
euro, but some analysts are more cautious,
arguing that weakness in some member
countries, including Ireland, Greece and Portugal,
may hold the ECB back from raising rates in the
near term.
Irish Prime Minister Brian Cowan resigned as
head of the Fianna Fail party at the weekend,
sparking political turmoil as for the country as it
tries to pass a budget bill to access a bailout
from the EU and IMF. [ID:nLDE70M0AH]
"I don't see how it's possible to raise rates this
year given the dire circumstances of the
peripheral nations," said Greg Salvaggio, vice
president of trading at Tempus Consulting in
Washington.
"Euro zone debt issues have gone to the
backburner and U.S. municipal financing
concerns are front and center," he added. "But
the U.S. will outgrow the euro zone this year,
and when the focus shifts to growth differentials
and euro zone debt issues, that will
change." [ID:nN24172184]
He said a euro failure to close above $1.3650 on
Monday could spark a pullback. The euro
retained a key technical level around $1.3570, a
50 percent retracement of its decline from
November to early January. Technical analysts
say it must hold above that level on a sustained
basis to extend its gains.
The euro's broad rally has cleared out short
positions, or bets that the shared currency
would depreciate. The latest CFTC data show
IMM euro positions held by speculators shifted to
4,109 net long contracts last week, versus
45,182 net shorts the previous week.
Source: Http://us.mobile.reuters.com/article/idUSN2419042620110124?ca=rdt
a fifth straight session on Monday, hitting a two-
month high near $1.37 as expectations of higher
euro zone interest rates sparked traders to push
the currency above important technical levels.
Political turmoil in Ireland again highlighted
problems in indebted euro zone countries and a
suicide bombing at Russia's biggest airport
capped the European currency's rise.
But the euro gained momentum in the New York
session, and traders said tough talk on inflation
from European Central Bank President Jean-
Claude Trichet on Sunday was a catalyst driving
it to its highest level since November.
[ID:nLDE70M0GT]
"They are closer to tightening in the euro zone
with a lot less spare capacity, and it is realistic to
expect the ECB to tighten before the Federal
Reserve," said Kathy Lien, director of research at
GFT Forex in New York.
The euro EUR=EBS was up 0.3 percent on the
day at $1.3655 on electronic trading platform
EBS, after climbing as high as $1.3683, its highest
since November. Euro gains accelerated after
automatic buy orders were triggered at $1.3615
to $1.3620 were breached. Traders said $1.3695,
the Oct. 20 low, was the next upside target.
Solid data on euro zone industrial orders and a
robust euro zone flash estimate of services
purchasing managers activity also bolstered the
currency. [ID:nSLALCE7NA] [ID:nBRLOCE7AH]
The dollar fell 0.3 percent to 82.38 yen JPY=EBS
while the euro was unchanged at 112.50 yen
EURJPY=EBS, just off a two-month high hit in
earlier trade and not far from its 200-day
moving average.
EURO STILL FACES HURDLES
The euro has rallied some 6 percent in the past
two weeks, aided by increasing international
support for the euro zone's debt rescue plan and
concerns that higher inflation will prompt a rate
rise this year.
The spread between euro zone and U.S. bond
yields has widened as a result and boosted the
euro, but some analysts are more cautious,
arguing that weakness in some member
countries, including Ireland, Greece and Portugal,
may hold the ECB back from raising rates in the
near term.
Irish Prime Minister Brian Cowan resigned as
head of the Fianna Fail party at the weekend,
sparking political turmoil as for the country as it
tries to pass a budget bill to access a bailout
from the EU and IMF. [ID:nLDE70M0AH]
"I don't see how it's possible to raise rates this
year given the dire circumstances of the
peripheral nations," said Greg Salvaggio, vice
president of trading at Tempus Consulting in
Washington.
"Euro zone debt issues have gone to the
backburner and U.S. municipal financing
concerns are front and center," he added. "But
the U.S. will outgrow the euro zone this year,
and when the focus shifts to growth differentials
and euro zone debt issues, that will
change." [ID:nN24172184]
He said a euro failure to close above $1.3650 on
Monday could spark a pullback. The euro
retained a key technical level around $1.3570, a
50 percent retracement of its decline from
November to early January. Technical analysts
say it must hold above that level on a sustained
basis to extend its gains.
The euro's broad rally has cleared out short
positions, or bets that the shared currency
would depreciate. The latest CFTC data show
IMM euro positions held by speculators shifted to
4,109 net long contracts last week, versus
45,182 net shorts the previous week.
Source: Http://us.mobile.reuters.com/article/idUSN2419042620110124?ca=rdt
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