Euro Down on Greece Jitters, Faces Test on Charts
Baku, May 25 (AZERTAC). The euro fell on Wednesday, pressured by selling by hedge funds and stop-loss offers as worries over Greece`s finances cast a pall over the single currency, bringing it closer to testing crucial support levels on charts.
Speculative selling of the euro intensified on vague market talk that Greece may call a snap election and as investors trimmed risky positions, with a drop in U.S. stock index futures adding to pressure on the euro.
The euro seemed poised for a test of chart support following its latest drop, with the bottom of the cloud on the daily Ichimoku chart, a Japanese technical analysis tool popular among traders, and the euro`s 100-day moving average both nestled near $1.3985.
A clear breach of such levels may open the way for a further drop in the euro, especially since stop-loss offers are said to be lurking near $1.3968, a two-month low struck earlier this week on trading platform EBS.
The euro fell 0.3 percent to $1.4060, having dipped to $1.4034 earlier.
It trimmed some of its losses after meeting solid demand from Asian investors, dealers said, adding that downward pressure on the euro also eased as short-term players who were caught long after Tuesday`s rally finished squaring their positions. Indeed, the euro gave back the bulk of gains it made on Tuesday on data showing that German business morale held steady in May. That reading was better than expected and signaled Europe`s top economy may retain strong growth momentum longer than previously thought.
The dollar rose broadly as investors cut back on risk taking, with the Australian dollar slipping 0.4 percent to $0.7938.
The dollar held steady against the yen at 81.95 yen, not far from a one-month high of 82.232 yen hit last week.
The yen took in its stride data showing that Japan posted a smaller than expected trade deficit in April.
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