* Dollar/yen, cross/yen regain some ground after sell-off
* Yen pressured as short-covering and profit-taking fade
* Dlr/yen support at 200-day MA near Y83.50, then Y83.30
* Euro supported by China's pledge to buy Spanish bonds
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, April 13 The yen slipped on
Wednesday as a bout of risk reduction eased, with some market
players looking for fresh opportunities to put on bets against
the yen after having booked profits the previous day.
The yen fell against the dollar and dipped broadly on the
crosses, giving back some of the gains it made on Tuesday, when
it rallied broadly as short-covering of the Japanese currency
Traders said a sell-off in global equities and commodities
coupled with an upgrade of Japan's nuclear crisis had prompted
investors to unwind some of the recent one-way yen-funded carry
trades. But some market players said it had more to do with
extended positioning more than anything else.
"I think the markets at the moment are just pausing to take
a bit of profit and assess things in the yen crosses," said
David Forrester, FX strategist at Barclays Capital in Singapore.
"We have to remember that over the past two weeks we have
had a big rush into yen-funded carry trades," Forrester said.
The Australian dollar edged up 0.5 percent against the yen
87.67 yen . It regaining some ground after Tuesday's
1.8 percent slide, but still remained well below a 2-1/2 year
high just above 90 yen touched on Monday.
A bout of risk reduction and position unwinding seen on
Tuesday across various markets seemed to lose momentum on
Wednesday, with equities showing signs of stabilising after a
MSCI's broad measure of Asia-Pacific shares outside Japan
dipped 0.2 percent , a mild drop compared to its
1.6 percent fall on Tuesday.
DOLLAR SUPPORT NEAR Y83.50
The dollar rose 0.5 percent to 83.98 yen after having
slid more than 1.2 percent on Tuesday for its biggest one-day
percentage drop in four months.
The dollar bounced off support at its 200-day moving average
near 83.50 yen. More support lies at 83.34 yen, the 23.6 percent
retracement of the dollar's mid-March to April rally, and 83.30
yen, the dollar's March 11 intraday high.
Short-term resistance lies at 84.33 yen, the conversion line
on the daily Ichimoku chart, a form of Japanese technical
analysis widely used among market players.
Among the bets against the yen that were closed out the
previous day were punts taken using FX options, said a customer
dealer for major Japanese bank, adding that some market players
on Tuesday sold dollar call options with strike prices of 86 yen
and 88 yen to book profits.
"After they booked profits yesterday, positions held by
market players who had taken bets against the yen earlier are
now pretty square," the customer dealer said. "They are now
looking for the proper timing and catalyst to build yen-selling
The euro last stood near 121.51 yen , up 0.4
percent from late U.S. trade on Tuesday but well below an
11-month high of 123.33 yen hit on Monday. Immediate support is
seen around 120, the overnight low, then the 119.20/60 area.
"At this stage, we don't see reason to believe that the
early week price action marks the start of a broader 'risk-off'
move ... This latest dip is an opportunity to reset or extend
longs (against the yen)," analysts at BNP Paribas wrote in a
The euro held steady against the dollar at $1.4474 ,
having touched a 15-month high of $1.4520 on Tuesday on trading
The euro gained a lift against the dollar on Tuesday after
Chinese Premier Wen Jiabao said China will carry on buying
Spanish sovereign bonds. [ID:nLDE73B12S]
The U.S. dollar index, which tracks the dollar's performance
against a basket of major currencies, edged up 0.1 percent to
74.925 , but was still not far from a 16-month low of
74.704 struck this week.
(Editing by Kevin Plumberg)