The euro was buoyant against the dollar on Wednesday after recovering from a seven-week low earlier in the week, but wariness over Europe's sovereign debt problems kept investors nervous about piling up euro positions. The euro drew support from a recovery in oil prices and precious metals, while a downward trend in US Treasury yields weighed on the dollar.
"The euro is still in a correction phase after recent declines. It has the potential to advance towards $1.43-$1.44 on hopes for more buybacks by foreign investors," said Hideki Amikura, a forex manager at Nomura Trust and Banking. The euro rose 0.3 percent to $1.4275, breaking through the previous day's high after slumping to a seven-week low of $1.4048 on Monday.
The European currency could test its 50-day moving average, currently at $1.4325, in the near term, said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ. Europe's top financial officials broke a taboo on Tuesday and acknowledged for the first time that Greece may have to restructure its debt, which could stoke the region's sovereign debt crisis.
The euro drifted lower against the yen after gaining support in early trade on expectations of yen-selling flows linked to M&A deals by Japanese corporations, traders said. The euro fell 0.1 percent to 115.83 after climbing to a high around 116.40 yen in early Asian trade. The dollar fell 0.3 percent to 81.20 yen, with stop-loss sell orders triggered after it drifted down from Tuesday's high of 81.77 yen.
The dollar was weighed down as the market detected a series of sell orders by Japanese retail investors lined up between 81.50 and 81.70 yen, traders said. Further stop-loss dollar sell orders are rumoured to be placed at 81.00 yen and 80.80 yen, they said. The New Zealand dollar advanced to $0.7890 after news that producer input prices rose 2.2 percent in the three months to March 31 from the previous quarter, the sixth straight increase and the largest quarterly movement since September 2008. The Australian dollar advanced to $1.0655 after slipping to the day's low of $1.0615 on data showing that the Australian wage price index rose 0.8 percent in the first quarter versus the previous quarter, below economists' forecast of 1.1 percent.