Euro and Australian dollar hit by profit taking

The commodity currencies and the euro suffered heavy losses in Asian trading today as investors cut commanding positions after key events such as the European Central Bank’s injection of cash passed without surprise, reports Reuters.

The euro dropped from close to three-month highs after banks in Europe took on 530bn euros of cheap three-year ECB funds. The single currency was at $1.3328, having fallen by over one per cent from Wednesday’s high $1.3485. It was still up by almost two per cent during all of last month.

Immediate support is at $1.3321, the monthly high on 9 February, and the 100-day moving average, $1.3293. Markets had bought into the single currency and commodity currencies before the ECB cash injection, believing the funds would help ease banking system strains and shore up the sovereign bond market in the eurozone.

The Australian dollar fell by more than a cent to $1.0724, from its six-month high of $1.0857, and the New Zealand dollar also tumbled from its six-month peak of $0.8471 to $0.8339.%
All this led to the US dollar rebounding from close to three-month lows. There was a rise in the dollar index of 0.7 per cent to 78.811. the US currency also jumped by a full yen to 81.22, close to a nine-month high of 81.61 set recently.