* Euro boosted after Greek lawmakers rubber-stamp bailout
* Strong euro resistance around $1.33 seen capping gains
* Buoyant dollar trend intact, U.S. yields climb
By Nia Williams
LONDON, March 21 The euro edged higher against
the dollar on Wednesday on signs Greece's bailout was
progressing smoothly, although further gains were expected to be
capped as a stronger dollar trend driven by higher U.S. Treasury
yields reasserted itself.
The shared currency rose 0.3 percent to an almost
two-week high of $1.3283 after Greece's lawmakers approved the
country's second bailout deal, as expected.
Many analysts said the approval had been seen as a formality
but signs the Greek bailout was on track, coupled with some
short covering as investors who had bet against the euro squared
those positions, boosted the single currency.
"This was not a big step but has been perceived as positive
by the market," said Lutz Karpowitz, currency analyst at
Technical analysts said the euro rally was likely to run out
of steam around $1.33, just above the 61.8 percent retracement
of the late February to mid-March fall from $1.3485 to $1.30.
"We would expect these levels not to break which would mean
the euro/dollar uptrend comes to an end in the short-term. The
broader trend is still a stronger dollar and on that point we
see the economy picking up in the U.S.," said Karpowitz.
The dollar has climbed in recent weeks on fading
expectations of further monetary easing by the U.S. Federal
Reserve after a modest brightening of its economic outlook.
In contrast, investors remained nervous of another flare up
in the euro zone debt crisis. Although Greece received its first
batch of bailout payments this week, the Italian government
looked set to clash with trade unions over reforms to employment
"If U.S. data remains solid U.S. yields may continue to
track higher, while Europe faces some risks to this euro
strength from the Italian labour reform talks and continued poor
economic news from Spain," said Christopher Gothard, head of FX
for Brown Brothers Harriman in Hong Kong.
Ten-year U.S. Treasury yields were last trading around 2.37
percent, within sight of a 4-1/2 month high of 2.399 percent hit
U.S. housing data, due later in the session, could help
boost the dollar if it adds to expectations that growth in the
world's largest economy is picking up.
YEN DIPS BROADLY
Rising U.S. yields and monetary easing from the Bank of
Japan last month have also boosted the dollar against the yen.
The greenback rose 0.1 percent to 83.77 yen, not far off
an 11-month high of 84.187 yen hit last week.
During the Asian session Japanese exporters were seen
selling the dollar ahead of the end of their financial year on
March 31, but market players said there was good demand to buy
the greenback on dips.
The euro touched a near five-month peak of 111.30
yen on trading platform EBS, nearing resistance around 111.57
yen, the peak hit on Oct. 31 when the Japanese authorities last
intervened in the market.
The yen also sagged against sterling, with the pound rising
to a session peak of 133.37 yen, its highest level
against the Japanese currency since June 2011.
Meanwhile the Australian dollar rose 0.3 percent to
US$1.0506, recouping some losses after posting its biggest daily
drop in three months on Tuesday.
Morgan Stanley strategists recommended selling the
growth-correlated Australian dollar on any rebounds to US$1.0530
given signs growth in China was slowing.