* U.S. President Obama's deficit cut deemed dollar positive
* Euro drops from 15-month high on technical selling
* Dollar/yen gains ground after sell-off
(Adds quotes, updates prices, changes byline)
By Julie Haviv
NEW YORK, April 13 (Reuters) - The euro fell from a
15-month high on Wednesday on technical selling and while U.S.
President Barack Obama unveiled deficit cuts that were deemed
positive for the dollar.
Overall sentiment toward the greenback, however, remains
largely bearish given expectations the U.S. Federal Reserve
will significantly lag global central banks in raising
interest rates.
President Barack Obama set a goal of cutting the U.S.
budget deficit by $4 trillion, plunging into the debate over
the nation's fiscal woes after accusations he has failed to
lead on the issue. For details, double-click on []
"On the margin, I think the extent of cuts proposed by the
president are dollar positive in that they are expected to
bring down America's deficit to much more manageable levels in
the years ahead," said Omer Esiner, chief market analyst at
Commonwealth Foreign Exchange in Washington.
The euro, meanwhile, was down against the greenback, after
earlier hitting a fresh 15-month high.
The single euro-zone currency could be vulnerable to
pullbacks after racking up about 8 percent gains this year.
Overall, though, the euro remained supported by the
prospect of more interest-rate increases by the European
Central Bank.
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For graphic on Fed funds rate hike expectations:
http://r.reuters.com/xyz48r
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In early afternoon New York trading, the euro <EUR=> was
down 0.3 percent at $1.4437, having earlier hit $1.4521, a
15-month peak on EBS trading platform.
Joseph Trevisani, chief market analyst at FX Solutions in
Saddle River, New Jersey, said the euro's move below $1.4450
was technical and moderate-size stops below $1.4450 were
activated when the trend line support at $1.4445 was
breached.
"The support line went back 10 days to April 3," he said.
"Do not expect any permanent change in the euro."
Technical analysts said the euro's uptrend remained intact
while the currency is above $1.4250/80 -- the area from which
the euro bounced toward current highs. A sustained break above
$1.4600 could open up the path for a test of $1.5000.
The options market, however, isn't following the move in
spot prices.
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Graphic: Euro/dollar spot rate and 1 month risk reversals
http://r.reuters.com/hyz88r
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Options investors are still betting on a decline in the
euro against the dollar, with risk reversals for one-month
options still showing a solid bias for "puts". Wednesday,
euro risk reversals were at -1.35 <EUR1MRR=GFI>.
Meanwhile, the yen fell against the dollar after rising
for four straight days, as risk appetite improved and the
currency's downtrend was seen intact as long as risk-taking
holds up.
The dollar was up 0.3 percent at 83.83 yen <JPY=> after
sliding more than 1.2 percent on Tuesday for its biggest
one-day fall in four months.
The negative impact on Japan's economy from the recent
earthquake should ensure Japanese monetary policy remains
ultra-loose for a prolonged period. That should prompt
investors to use the yen as a funding currency in carry
trades.
The euro was down 0.1 percent at 120.96 yen <EURJPY=R>,
well below an 11-month high of 123.33 yen hit on Monday.
The U.S. government's budget debate is likely to get
heated in the coming weeks, with the looming debt ceiling
expected to be a major issue possibly weighing on the dollar.
The U.S. Treasury has estimated the government is about $95
billion away from hitting its debt ceiling and this could be
well be reached by mid-May.
(Additional reporting by Nick Olivari and Gertrude
Chavez-Dreyfuss in New York; Editing by Jan Paschal)
