* Euro holds near 2-mth highs on easing debt concerns
* Resistance seen at $1.2767 and then at $1.2780
* Aussie holds previous day's gains, U.S. earnings help
By Masayuki Kitano
TOKYO, July 14 (Reuters) - The euro held steady near a
two-month high against the dollar on Wednesday, with
high-yielding currencies such as the Australian dollar supported
by a seemingly significant improvement in risk appetite.
The dollar could come under more pressure, especially against
higher-yielding currencies, in reaction to robust U.S. corporate
earnings.
Intel Corp <INTC.O> reported results above expectations and
gave an upbeat sales outlook, pushing S&P futures higher <SPv1>
<.SPX>. []
Traders said funds were increasingly moving out of cash and
low-yielding U.S. Treasuries to buy euro and growth-related
currencies. Helping drive sentiment was a strong start to the
U.S. corporate earnings season and easing concerns about euro
zone's sovereign debt and the financial sector.
The euro <EUR=> was little changed from late U.S. trading on
Tuesday at $1.2710. It hit a two-month peak of $1.2739 <EUR=EBS>
on Tuesday, brushing aside a Moody's downgrade of Portugal's
sovereign rating by two notches.
Instead, investors chose to pay more heed to the strong
response to a six-month treasury bill tender by Greece. The
debt-laden country sold 1.625 billion euros ($2.03 billion) of
T-bills at a better rate than it pays to borrow under a European
Union/International Monetary rescue fund. For more see
[].
"What we are seeing is that cash is being put back to work
with all the negative news surrounding the euro zone receding,"
said Greg Gibbs, currency strategist at RBS, Sydney.
"Some of the risk premium that was being attached to the euro
zone is being taken off. The downgrade of Portugal was very much
expected and I think we could see the euro rise a bit more from
here."
Chartwise, resistance is seen at $1.2767, the target of an
A-B-C wave sequence starting from the euro's four-year low of
$1.1876, with the C-wave starting at $1.2152.
The next target comes in at $1.2780, which is a 50 percent
retracement of its fall from mid-April to the June low.
The euro rose 0.3 percent against the yen to 113.18 yen,
hovering near a three-week high of 113.29 yen <EURJPY=R> hit
earlier.
The yen <JPY=> was broadly under pressure and retreated
against the dollar, which rose 0.3 percent to 88.96 yen, with
talk of stop-loss bids above 89.25 yen.
The yen, considered to be a safe-haven investment, is usually
sold off when risk appetite improves.
The dollar index <.DXY> was almost unchanged at 83.619,
having broken trendline support. New support is seen around
83.15, the 38.2 percent retracement of the the index's November
to June rally.
Other major U.S. corporates to report quarterly earnings
this week include JPMorgan Chase & Co <JPM.N> and Bank of America
Corp <BAC.N>. []
Some traders expressed doubts about whether the improvement
in risk appetite would last, saying it could worsen again if U.S.
banks' quarterly earnings come in weak.
Akira Hoshino, chief manager for the Bank of
Tokyo-Mitsubishi UFJ's foreign exchange trading department,
reckons U.S. economic indicators such as the Philadelphia Fed's
business activity index due later in the week could be key.
"Markets have pulled back up after having tried to factor in
pretty far in advance an economic slowdown and deflation,"
Hoshino said, adding that such concerns could come to the fore
again.
Sterling rose 0.3 percent to $1.5218 <GBP=D4>. Earlier in
the session, it scaled a two-month peak of $1.5245 after data on
Tuesday showed quarterly consumer price inflation remained above
the Bank of England's 2 percent target rate. []
The Australian dollar hit a three-week high of $0.8851,
though it later slipped a tad to around $0.8827 <AUD=D4> on light
profit-taking, with resistance at the June high of $0.8860, and
also at levels near $0.8880 to $0.8885.
The 100-day moving average and 61.8 percent retracement of
its April 12 to May 25 slide are near such levels.
(Additional reporting by Anirban Nag and Reuters FX analyst
Krishna Kumar in Sydney, Reuters FX analyst Rick Lloyd in
Singapore, Hideyuki Sano in Tokyo; Editing by Joseph Radford)
