* Dollar near 2-mth lows vs euro on economic worries
* Yen down on Japanese importers, intervention wariness
* Aussie rises despite less hawkish RBA
By Hideyuki Sano
TOKYO, July 20 (Reuters) - The dollar eased on Tuesday,
inching closer to a two-month low versus the euro hit last week
as investors continued to cut long positions on more
disappointing U.S. economic data.
The greenback rose a little against the yen on bids from
Japanese importers, but remained close to a seven-month low
marked last week, leading many market players to look to what
authorities in Japan could do about a firm yen.
The Australian dollar jumped more than 1 percent thanks to a
rise in Chinese shares as well as buying against the yen amid
wariness about Japanese yen-selling intervention.
The Wall Street Journal reported the Bank of Japan could
consider taking additional steps to support the economy if the
yen climbs to around 85 per U.S. dollar and stays there.
In Asian trade, the dollar rose about 0.4 percent to 87.01
yen <JPY=>, on buying by Japanese importers, off a seven-month
low of 86.27 hit on trading platform EBS on Friday.
Traders suspect Japanese officials would not want to see the
85 level breached in a hurry, though many traders doubt Tokyo is
ready to intervene at this point.
"I guess the authorities will be nervous. There will be
verbal intervention or they might do rate checks as they did
before. But I don't think they can do actual intervention," said
a trader at a Japanese financial institution.
Indeed, traders say they saw marginal yen-selling by Japanese
investors.
"Japanese investors' risk appetite hasn't come back. They are
not ready to sell the yen yet. It's hard to expect upside for the
dollar/yen," said a trader at a European bank.
Demand for the dollar waned further on Monday after the
NAHB/Wells Fargo Housing Market index fell more than expected in
July to its lowest level since April 2009, after a popular tax
credit for homebuyers expired in April. []
The report was the latest in a string of data that has
flashed warnings about the state of the U.S. economy and quashed
expectations of a Federal Reserve interest rate hike this year.
If Fed Chairman Ben Bernanke drops any hint of further easing
at testimony on Wednesday it could push the dollar down further,
some traders said.
"The overall bearish setup remains intact for dollar/yen,"
JPMorgan said in a morning report. "This follows last week's
breakdown below the key 87.00/22 yen support zone while affirming
the intermediate term bearish setup and a closer test of the
84.82 November 2009 cycle low."
The euro <EUR=> edged up 0.15 percent to $1.2963/64, not far
from a two-month high of $1.3008 hit last Friday.
Traders expect the pair to trade in a $1.28-1.31 range in the
coming days ahead of EU stress test results for banks and Fed
chief Bernanke's testimony.
Support for the euro is seen around the previous day's low of
$1.2870. Resistance comes in at Friday's high of $1.3008, while
some traders say a break of that level could push it to around
$1.3113, a Fibonacci retracement of its decline from last
December to early June.
The results of stress tests on 91 European banks are due on
Friday and there is a consensus building in the forex market that
it could be positive for the euro.
Bankers and officials in Greece, Spain and Belgium joined a
chorus of countries expecting their banks to pass the stress
tests, but doubts linger over whether the checks are tough or
transparent enough. []
Some traders suspect the euro could be in for a "buy on the
rumour sell on fact" retreat, after having risen nearly 10
percent from a four-year low, mostly shrugging off negative news
on the euro zone.
It brushed aside news that Moody's had cut Ireland's debt
rating and concerns that negotiations between Hungary and
international lenders had broken down. []
[].
Meanwhile, the Aussie <AUD=D4> rose 1.1 percent to $0.8775
and 1.4 percent to 76.38 yen <AUDJPY=>, helped by an upbeat mood
in Chinese share markets and wariness about Japanese yen-selling
intervention.
The Australian dollar quickly recovered the ground it had
lost after minutes from the Reserve Bank of Australia's (RBA)
July policy meeting that suggested it was unlikely to raise
interest rates next month if coming inflation data showed the
moderation it expected. []
The currency has strong support around $0.8575-8590, where
there is a 50 percent retracement of its rally this month as well
as a cluster of previous lows.
(Additional reporting by Anirban Nag and FX analyst Krishna
Kumar in Sydney; Editing by Michael Watson)
