FOREX-Dollar stumbles, higher stocks stoke risk demand
* Euro edges up to $1.4500 EUR=, risk demand lingers
* Dollar vulnerable on debasement fears
* Aussie, kiwi dollars off 1-year highs hit earlier
(Updates prices, adds comment, detail)
By Naomi Tajitsu
LONDON, Sept 9 (Reuters) - The dollar edged lower on Wednesday, extending sharp falls from the previous day, as slightly higher European shares bolstered risk demand and kept the U.S. currency near the year's low against a currency basket.
Renewed questions over the dollar's long-term status as the world's reserve currency, investors moving out of dollars into other assets such as gold, and options-related euro buying had fuelled broad-based dollar selling on Tuesday.
A slide in European shares had bolstered the dollar in early European trade, but their recovery prompted some traders to buy currencies seen as being higher risk on dips, prodding the dollar lower.
"That move suggests that there's still appetite for risk," said Jane Foley, research director at Forex.com. "There are still buyers who want to push euro/dollar above $1.45."
By 1059 GMT, the euro EUR= was a touch higher on the day at the key $1.4500 level, having climbed to the day's high of $1.4518 in early trade.
The euro held near the year's high of $1.4535 hit on Tuesday.
Against the yen, the euro EURJPY=R traded 0.2 percent higher at 134.04 yen, having risen as high as 134.18 yen in earlier trade, its highest in nearly two weeks.
"Risk-loving currencies continue to enjoy widespread support even as doubts linger over the health of the global economy," said Daragh Maher, deputy head of FX strategy at Calyon.
The dollar JPY= was slightly higher against the yen at 92.47 yen.
The U.S. currency was within sight of some key support levels, including a July low of 91.73 yen, and $1.4550 and beyond against the euro.
For a chart on euro/dollar's technicals, click: r.reuters.com/qev55d
Options traders said option triggers were set at $1.4550 while chart targets were seen at $1.4620, a 61.8 percent Fibonacci retracement of its fall from above $1.60 in July 2008 to its October low near $1.2330.
UBS analysts cut forecasts for the dollar on "equity markets continuing to do well in the short term and U.S. investors still continuing to diversify portfolios into overseas markets."
In a note, they raised their 1-month euro/dollar forecast to $1.45 from $1.40 and 3-month forecast to $1.35 from $1.30.
The dollar index .DXY, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 77.300, near a one-year low of 77.047 hit on Tuesday.
For a graphic of the dollar index's technical levels, click: r.reuters.com/caw55d
The Australian dollar hit a one-year peak of $0.8662 AUD=D4 and touched its highest in almost a month around 80.00 yen AUDJPY=R, although softer-than-expected retail sales took the wind out of its sails, pushing the Australian currency down 0.2 percent on the day to $0.8594.
The New Zealand dollar was last down 0.1 percent at $0.6943 NZD=D4 after hitting a one-year high of $0.6993.
Its peak comes ahead of a Reserve Bank of New Zealand meeting on Thursday, with expectations it will repeat that it wants to keep rates low well into 2010.
Sterling was flat, holding near two-week highs versus the dollar as markets awaited Thursday's outcome of the Bank of England's two-day policy meeting. The BoE is expected to keep rates unchanged and its asset-buying scheme untouched, although there is some speculation of further easing. [ID:nL7609671]
Due later on Wednesday is the Federal Reserve's Beige book, a summary of economic conditions in 12 Fed districts. Data on Tuesday showed U.S. consumer credit fell by a record $21.6 billion, raising concerns about the pace of recovery. (Additional reporting by Tamawa Desai in London and Charlotte Cooper in Tokyo; Editing by Chris Pizzey)
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