* Chart, trade volume show less interest in selling euro
* Fed minutes suggest bond buying in 2013, buoy euro
* Market risk-averse on U.S. fiscal cliff, Middle East
* Aussie hits 10-day low, Canadian dollar at 3-month low
* Yen stabilises after big loss on election news
By Hideyuki Sano
TOKYO, Nov 15 The euro hovered above a two-month
low on Thursday, having halted a five-day losing streak the
previous day on profit-taking, helped by minutes from the U.S.
Federal Reserve supporting more bond buying next year.
The euro has decoupled from other risk currencies, which
were hit by fears that political gridlock could push the U.S.
over its "fiscal cliff" and by an upsurge of violence in the
The yen showed signs of stabilising after suffering its
biggest losses against the dollar and the euro in two months on
Wednesday after Japanese Prime Minister Yoshihiko Noda indicated
he will call a snap election next month.
The euro traded at $1.2730, having rebounded from
Tuesday's two-month low of $1.2661, where it found some
technical support, including its 90-day average and the Ichimoku
The euro had almost constantly declined since it peaked
above $1.31 in mid-October, shedding 3.6 percent.
On the candlestick chart, however, the euro had a doji
pattern on Tuesday, which could be seen as a bullish reversal
sign after a bear trend because the pattern often appears when
the market is indecisive about extending a trend.
"The euro/dollar's trading volume had been falling until
Monday, suggesting investors' willingness to sell the euro had
been declining. And then trade volume rose on Tuesday when a
doji pattern appeared, suggesting that investors are turning
eager to take profits in euro selling," Masafumi Yamamoto, chief
FX strategist at Barclays in Tokyo, said in research note.
One possible resistance lies at the Ichimoku tenkan line at
$1.2769, while levels around $1.2800-10 could set stronger
resistance, hosting the Oct. 1 low as well as the 200-day
FED MEMBERS BACK BOND BUYS
The euro was also helped by minutes from the U.S. Federal
Reserve's policy meeting, which showed a number of board members
in October felt the Fed would need to step up asset purchases in
2013 to fill the gap when Operation Twist expires.
The minutes helped the dollar trim its gains against other
risk currencies in late U.S. trade, although the overwhelming
risk-off mood in financial markets supported the dollar against
less liquid currencies.
The Australian dollar fell 0.2 percent in early Thursday
trade to 10-day low of $1.0352, while the Canadian
dollar fell to three-month low against the U.S. currency, which
rose to C$1.0043.
The two currencies were hit by a fall on Wall Street to
four-month lows after U.S. President Barack Obama set up a
drawn-out fight over the fiscal cliff when he stuck to his
pledge to raise taxes on the wealthy.
Adding to the selling pressure, Israel launched a major
offensive against Palestinian militants in Gaza, killing the
military commander of Hamas in an air strike and threatening an
invasion of the enclave.
The dollar stood at 80.22 yen in early Asian trade,
flat from late U.S. levels and not far from a six-month high of
80.68 yen hit earlier this month.
The dollar jumped on Wednesday after the news of a snap
election in Japan fuelled speculation of more aggressive
monetary easing by the Bank of Japan.
Japan's main opposition Liberal Democratic Party, which
favors further monetary policy easing by the central bank, leads
in opinion polls. LDP leader Shinzo Abe called on the central
bank on Wednesday to print "unlimited yen" to achieve a new
Still, market players said the news was unlikely to drive
the dollar above the previous peak on its own.
"It's questionable whether unorthodox monetary policy will
suddenly work miracles in beating deflation," said Taisuke
Tanaka, chief FX strategist at Deutsche Bank in Tokyo.
Markets are also watching for an announcement of China's new
leadership, expected at 0300 GMT. With Vice President Xi Jinping
tipped to take over from outgoing President Hu Jintao as party
chief, the focus is on the makeup of the Politburo Standing
Committee - the innermost circle of power in China's