LONDON (Dow Jones)--Currency markets were holding steady in tight ranges in European trading Wednesday as participants refrained from placing new bets without firm news of a political deal in Greece that would pave the way for a default-saving bailout.
As yet another deadline passed, the euro failed to build on the previous day's gains against the dollar, faltering at $1.3289. But hope that the cross-party Greek talks on new spending cuts would be wrapped up soon was enough to prevent a sell-off in the single currency, market participants said.
"This morning there isn't the appetite for the euro to go above the $1.33 area against the dollar. So this level can probably hold until there is further news [on Greece]," said Jane Foley, a currency strategist at Rabobank in London.
The lack of decisive news also capped European share gains after earlier report that the European Central Bank was willing to make concessions on its own Greek government bond holdings in any wider debt-restructuring had helped to lift spirits.
Greek Prime Minister Lucas Papademos is due to meet party leaders at 1300 GMT on the reforms demanded by international creditors in exchange for the bailout. If all goes well, there could yet be a cabinet meeting later in the day to approve any deal.
Beyond that, Thursday's interest rate decisions from the European Central Bank and Bank of England are likely to move into focus. "The BoE is expected to deliver a further GBP50 billion of quantitative easing," said currency strategists at Morgan Stanley. "While the ECB is not expected to deliver further easing at this meeting, the tone at the press conference is expected to be in line with keeping the door open for further action in the months ahead," they added.
The pound came under slight pressure against the dollar ahead of Thursday's decision. The Swiss franc lost some ground against the euro as data showed Swiss unemployment at a 10-month high, underlining the economic reasoning that has prompted the Swiss National Bank to put a floor under the euro at CHF1.20.
More broadly, the greenback pared some gains against the yen, but remained higher on the day, while the commodity-linked currencies of Australia and New Zealand strengthened against the dollar.
In emerging markets, the Polish zloty was under pressure against the euro ahead of a post-rate decision press conference at 1500 GMT. Poland's central bank left its key rate at 4.5% earlier Wednesday., as expected.
At 1144 GMT, the euro was trading at $1.32778 against the dollar, compared with $1.3261 late Tuesday in New York, according to trading system EBS. The dollar was at Y76.980 against the yen, compared with Y76.77, while the euro was at Y102.210, compared with Y101.80. The pound was at $1.58951 against the dollar, compared with $1.5900 late Tuesday in New York.
The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 78.474 compared with 78.511 late Tuesday in New York.
A summary of key levels for chart-watching technical strategists:
Forex spot: EUR/USD USD/JPY GBP/USD USD/CHF
Spot 1140 GMT 1.3277 76.99 1.5895 0.9124
3 Day Trend Bullish Bullish Bullish Bearish
Weekly Trend Bullish Bearish Bullish Bearish
200 day ma 1.3550 78.39 1.5817 0.9050
3rd Resistance 1.3326 77.50 1.6091 0.9227
2nd Resistance 1.3299 77.30 1.6000 0.9180
1st Resistance 1.3289 77.19 1.5927 0.9141
Pivot* 1.3207 76.75 1.5865 0.9151
1st Support 1.3232 76.89 1.5840 0.9105
2nd Support 1.3194 76.80 1.5791 0.9066
3rd Support 1.3170 76.52 1.5730 0.9000
Forex spot: AUD/USD
Spot 1140 GMT 1.0827
3 Day Trend Bullish
Weekly Trend Bullish
200 day ma 1.0282
3rd Resistance 1.0985
2nd Resistance 1.0911
1st Resistance 1.0846
Pivot* 1.0778
1st Support 1.0782
2nd Support 1.0702
3rd Support 1.0684