FOREX-Euro holds near 3-wk high, Aussie finds support

  • Euro seen facing tough resistance around $1.3300
  • Bond sales, German data key events this week
  • Aussie better bid after big fall last week
    By Ian Chua
    SYDNEY, March 26 (Reuters) - The euro held near a three-week high against the greenback on Monday, while commodity currencies such as the Australian dollar steadied from a hammering last week, though persistent worries on the global economy were seen keeping a lid on their gains.
    The euro stood at $1.3275, not far off Friday’s peak of $1.3293. There is talk of selling interest around $1.3290/00, ahead of resistance at $1.3302, a level representing a 61.8 percent retracement of the late February to mid-March fall.
    The single currency also faces risk from a barrage of events this week, including key economic data from Germany, bond auctions in Italy and a meeting of euro zone finance ministers.
    Italy is looking to raise up to 7.5 billion euros in debt markets amid renewed pressure on peripheral euro zone debt sparked by fears of fiscal slippage.
    “Any sign of erosion in restored confidence for these bonds is likely to weigh on the euro,” Barclays Capital analysts wrote in a client note.
    "We continue to expect EUR/USD to fall gradually to $1.20 in 12 months on the back of easier monetary conditions in the euro area and as the risk-premium will likely remain elevated."
    For now, the euro is holding up remarkably well and this is keeping the dollar index pinned near a two-week low of 79.214 set on Friday.
    Against the yen, the greenback was at 82.56, having retreated from an 11-month high of 84.17 set on March 15.
    The Australian dollar, which suffered a steep fall last week, popped up to $1.0492, from $1.0475 late in New York on Friday, with traders noting good buying interest from a Swiss bank.
    But worries about a hard economic landing in China, Australia’s single biggest export market, have soured the Aussie’s outlook.
    The selloff came after global miner BHP Billiton commented about slowing iron ore demand from China, and an HSBC survey showed Chinese factory activity shrank for a fifth month in March.
    “In the short-term and given the latest AUD skid was driven by slightly selective reading of comments from a BHP mining executive and contracting China manufacturing activity, we think over-extended (long) market positioning has exaggerated the decline in the AUD,” said Gavin Friend, National Australia Bank market strategist.
    “For the coming week we look for a 1.0220-1.0550 range.”