* Euro recovers, but seen vulnerable
* Greek debt default concerns underline euro zone problems
* Canadian CPI jumps, pushing CAD to 1-week high vs USD
By Naomi Tajitsu
LONDON, April 19 (Reuters) - The euro rose against the
dollar on Tuesday as it recovered from the previous day's
selloff, but debt problems in the euro zone continued to weigh
on the single currency, keeping it vulnerable to more losses.
The euro <EUR=> was up 0.5 percent at $1.4309, nudging up
after stop-loss orders were triggered above $1.4250, while the
Canadian dollar outperformed, jumping to a one-week high against
the U.S. dollar after strong Canadian inflation data.
The single currency recovered some of Monday's losses, when
risky assets were hit by growing talk Greece will have to
restructure its mountain of debt and by Standard & Poor's threat
to cut the United States' AAA credit rating.
But traders said the euro could encounter more selling ahead
of the Easter holidays. It may also be hemmed in by options
expiries due on Tuesday at $1.4200 and $1.4300.
"The European debt crisis is in the market's focus again,
and people are concerned there is no lasting solution.
Meanwhile, even negative news in the U.S. isn't putting too much
pressure on the dollar anymore," said Lutz Karpowitz, currency
analyst at Commerzbank in Frankfurt.
Earlier, comments from a German Finance Ministry official
that a Greek debt restructuring was inevitable caused the euro
to pare some early gains but it then rebounded. []
Athens has denied such a possibility.
The comment supported an Athens newspaper report which cited
a European Commission official saying Greece has accepted it
cannot avoid a restructuring. []
Elsewhere, the Canadian dollar reversed its recent losses to
hit a one-week high versus the greenback <CAD=D4> after data
showed Canadian inflation shot to its highest since September
2008 and above the central bank's target range. []
The data will add pressure on the Bank of Canada to resume
raising interest rates. The U.S. dollar lost 0.7 percent to hit
C$0.9574.
EURO VULNERABLE
The euro has pulled back sharply after it was unable to hold
onto a 15-month high above $1.45 hit earlier this month.
Analysts said the possibility that a country which has
received a debt bailout may still have to restructure its
borrowing was likely to encourage more investors to exit long
euro positions.
"We are now seeing a rapid reversal of fortune with the euro
now ranked as the overall weakest currency across the system of
models," BNP Paribas said in an FX quantitative strategy note.
"With euro bearish signals still being generated we expect
further euro selling over the short term."
Positioning data from the Commodity and Futures Trading
Commission on Friday showed net euro long positions at their
highest since December 2007, leaving scope for a reversal.
[]
Analysts said investors were wary of holding bets in favour
of the euro over the upcoming four-day Easter holiday weekend,
adding that that the single currency could encounter more losses
if those positions are closed out.
The dollar <.DXY> slipped 0.4 percent on the day against a
currency basket to 75.182.
Given that a majority of U.S. debt is owned by foreign
investors, some analysts were surprised the S&P announcement
failed to trigger lasting dollar selling. Some said the dollar's
gains suggested investors were keen to lighten their heavy
positioning in favour of the euro.
"The price action suggests the euro was getting pretty
tired. It was definitely looking that way around $1.45," said
Paul Mackel, director of currency strategy at HSBC.
He said there was a risk that the dollar could squeeze
higher and for longer than investors currently think.
The U.S. currency <JPY=> was flat at 82.61 yen.
(Additional reporting by Jessica Mortimer; Editing by Susan
Fenton)
