* Euro needs to clear $1.3500 to extend six-month-long recovery
* Yen slide on pause for now, but downtrend intact
* US GDP and Fed meeting loom, could be USD negative
By Wayne Cole
SYDNEY, Jan 30 (Reuters) - Euro bulls were battling to break 14-month peaks versus the dollar on Wednesday and trip option barriers at $1.3500, while the yen stayed under pressure on the belief that true reflation in Japan would require a much weaker currency.
Upbeat earnings results from Amazon sent its shares up 10 percent after the bell and promised to extend the recent rally in share markets, which could bode well for the global economy this year. That benefited growth-leveraged currencies such as the Canadian and Australian dollars.
Dealers were also looking ahead to the outcome of the Federal Reserve’s first policy meeting of the year at 1915 GMT. The central bank is widely expected to reaffirm its commitment to super-easy policy until unemployment falls sharply, which could ease concerns about an early end to bond buying.
In contrast, the European Central Bank seems disinclined to ease any further - giving the euro something of an yield advantage. The single currency made the most of it, rising to $1.3490 and having been as high as $1.3497.
“Speculators are trying to trigger option barriers at $1.3500, which would force the holders to buy more euro and so get another leg going,” said a trader at an Australian bank in Sydney.
“If it does break the big (chart-following) model funds might also pile in and the rally becomes self-fulfilling.”
He cited chart targets at $1.3548, $1.3614 and even $1.3835.
The euro also resumed its ascent on the yen to reach 122.36 yen, nearing Monday’s peak around 122.90. Next stop is the April 2011 high around 123.33.
The dollar tracked sideways on the yen at 90.76, though analysts assume it is only a matter of time before it crack the recent top of 91.25.
Chart support is seen around 90.00 with targets at 92.25 and 94.00, which would be a 38.2 percent retracement of the long decline from the 2007 cycle peak around 124.16.
Selling the yen has been mostly a one-way bet since mid-November, based on expectations that Japanese Prime Minister Shinzo Abe would push the Bank of Japan into more aggressive monetary easing to beat deflation.
Present BOJ Governor Masaaki Shirakawa, whose term ends in April, is expected to be replaced with a much more dovish governor, who could then bring forward any easing.
Aside from the Fed, investors are looking out for the first estimate of U.S. fourth-quarter GDP due later on Wednesday, a couple of days before the January jobs report.
Median forecasts are for annualised growth of just 1.1 percent, down from 3.1 percent in the third quarter. Such a lacklustre result would likely support the doves at the Fed, particularly as tax hikes enacted this month could hamper growth for the first quarter as well.
The impact was clear in the Conference Board measure of consumer confidence out on Tuesday which showed an unexpected slide to 58.6 for January, its lowest in over a year.