* Yen off lows against euro, Australian dollar
* Investors trim short yen positions after new quake
* Euro slips, but solid support seen from Asian c.banks
(Recasts, adds quotes, technical levels)
By Anirban Nag
LONDON, April 11 The yen was off an 11-month low
against the euro and a 2-1/2 year trough versus the Australian
dollar on Monday, as another earthquake in Japan led some
investors to pare bearish bets against the Japanese currency.
Traders said speculators' positioning and some technical
indicators suggested that rallies in the euro and the Australian
dollar against the yen could pause in the short run with the
latest earthquake being used by some to book profits.
"Clearly investors are pausing to re-assess the impact from
the latest earthquake," said Jeremy Stretch, head of currency
strategy at CIBC World Markets. "This has put a cap on the
risk-on trade we saw earlier in the session. Equity futures are
off their highs and cross/yen positions are being pared back."
The euro was down 0.4 percent at 122.24 yen EURJPY=,
having hit its highest since May 2010 of 123.33 yen on trading
platform EBS. The Australian dollar was down at 89.24 yen
AUDJPY=R, having scaled a high of 90.04 yen earlier, its
highest since September 2008.
Commerzbank technical analyst Karen Jones said near-term
support for the euro/yen pair lay around the 121.55/60 yen area,
the lows hit in late February 2010, adding that short yen
positions could see some more profit taking in the short run.
She saw near-term support for the Australian dollar at 86.40
yen, the 23.6 percent retracement of its recent rally from a low
of 75.05 yen on March 17 to a high of above 90 yen on Monday.
The dollar also lost ground, and was last down 0.2 percent
at 84.60 JPY=, hitting a session low of 84.55 yen, according
to Reuters data, soon after news of the fresh tremors in Japan.
The yen has fallen sharply in the wake of joint yen-selling
intervention by the Group of Seven nations in March. The G7
stepped in after the yen hit a record high of 76.25 yen to the
dollar on March 17, propelled by speculation that Japanese
investors would repatriate their overseas assets after a massive
earthquake and tsunami struck Japan's northeast on March 11.
Market expectations for the Bank of Japan to lag behind
other central banks in raising interest rates and a drop in
volatility after the G7 intervention have shifted the focus to
the appeal of carry trades, a tactic of selling low-yielding
currencies to fund investment in higher-yielding ones.
SHORT YEN POSITIONS RIPE FOR PULLBACK
Data from the Commodity and Futures Trading Commission
(CFTC) showed speculators went net short on the yen for the
first time in six weeks and by the biggest margin since May 2010
at a net 43,231 contracts in the week to April 5.
Technical indicators such as the 14-day relative strength
index and slow stochastics also suggested that the euro and
Australian dollar are in overbought territory against the yen,
pointing to the possibility of a near-term pull-back.
Positioning in the Australian dollar also looked stretched
judging by the CFTC data, which showed that currency speculators
held record long positions in the Aussie dollar in the week to
April 5. [ID:nN08255295]
"The Aussie/yen positions are clearly overbought and ripe
for a correction," said Adam Myers, senior currency strategist
at Credit Agricole. "Should the U.S. dollar start to reverse
course, and that trend will become clear this week, we will see
some of those big carry trade positions being unwound."
For now, though, the U.S. dollar eased back in the direction
of last week's 16-month low against a basket of major currencies
.DXY, and also extended its recent losses against some Asian
currencies. [ID:nL3E7FB043] [ID:nL3E7FB084]
A number of Asian central banks are said to have intervened
to prevent their currencies from rising, and traders said they
were likely to recycle those proceeds into the euro, lending
support to the common currency.
The euro slipped 0.2 percent to $1.4460 EUR=, hovering
around the 21-hour moving average at $ 1.4454, with bids said to
be around the $1.4410-25 area and lower. It had hit a 15-month
high of $1.4489 on Friday.
(Editing by Stephen Nisbet and Susan Fenton)