RTRS: FOREX-Euro hits two-week low vs dollar, more losses seen
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 7 (Reuters) - The euro fell against the dollar for a fourth straight day on Monday, with further weakness seen likely, as soft German industrial data prompted investors to book profits after the single currency's new year rally.
The euro hit a two-week low, falling below the current 100-day simple moving average, a key support, at around $1.3532. Investors focused on $1.3500, followed by $1.3480, the 38.2 percent retracement of the January-to-February rally.
Investors sold the euro as they pared back expectations of a euro zone rate hike in the coming months and analysts said its near-term direction would still hinge on the progress of discussions on a euro zone debt rescue fund.
David Watt, senior currency strategist, at RBC Capital Markets in Toronto, said that given the euro zone's debt problems, the euro has had a good run and overcome most of the hurdles.
"But (European Union) realities are starting to creep back in and the reality is there is still no long-term plan to address the crisis. So I think investors are quite happy to sell into the euro's rallies."
Further weakening the euro's resolve was a report showing German industrial orders fell 3.4 percent in December, worse than forecasts for a 1.5 percent fall, on weak demand outside the euro zone. The data highlighted the German economy's reliance on external demand. For details, see [ID:nLDE7160ZR]
In addition, U.S. Treasury yields have moved higher on expectations of a stable recovery in the world's largest economy, supporting the dollar. Friday's report showing a decline in the U.S. unemployment rate to 9.0 percent added to that view and raised questions over whether the Federal Reserve would keep interest rates low for a long time.
"Those sentiments appear more dominant in the market at present and more consistent with the continued rise in U.S. yields," said Bob Lynch, senior currency strategist at HSBC Bank in New York.
In early New York trading, the euro EUR=EBS fell 0.5 percent to $1.3521, extending losses made after the U.S. payrolls report on Friday. It hit a low of $1.3512 on electronic trading platform EBS.
Traders said the German data triggered stop-loss orders on the downside, overtaking earlier demand from Asian firms as most Asian markets resumed trading after the lunar new year holidays.
Euro positioning has also become more neutral after significant shorts taken on the currency. Currency speculators raised their bets on it for the week to Feb. 1 to the most since late October.
