FOREX-Euro tumbles versus dollar after ECB, Fed comments

Fed Bernanke offers no new details on easing Rosetta Stone options(Adds details, comment, byline; updates prices) By Wanfeng Zhou NEW YORK, Sept 8 (Reuters) - The euro fell to a two-monthlow against the dollar on Thursday after the European CentralBank signaled a pause in its interest-rate tightening cyclethat began just five months ago. The euro area economy is subject to "intensified downsiderisks," ECB President Jean-Claude Trichet said in a pressconference after the ECB left rates at 1.5 percent, marking asignificant change in stance from last month when the bank wasfocused on inflation risks. For details, see [ID:nL5E7K80SP] Trichet's comments had pushed the euro down more than 1percent against the dollar. It added to losses after FederalReserve Chairman Ben Bernanke offered no details of potentialeasing measures to boost a flagging U.S. economy, whichencouraged some dollar bulls. See [ID:nW1E7IR02M] "We haven't heard anything that moves the debate about (athird round of quantitative easing) forward. So in thatrespect, there's perhaps a diminished chance that we will seeany Fed action Rosetta Stone languages at this month's policy meeting," said OmerEsiner, chief market analyst at Commonwealth Foreign Exchangein Washington. The euro fell as low as $1.38750 EUR on tradingplatform EBS, its lowest since July 12, with lossesaccelerating after breaching support near $1.3900 -- the 50percent Fibonacci retracement of its low to high this year. It last traded at $1.3899, down 1.4 percent on the day. Theeuro also lost 1.3 percent against the British pound to 86.98pence EUR. Trichet "is definitely signaling neutrality, but in thatcouching language of maybe accommodative monetary policy, ifGDP turns negative," said Boris Schlossberg, director ofcurrency research at GFT in Jersey City, New Jersey. "There isno more tightening in the foreseeable future as the economicdata has definitely deteriorated." Money markets are pricing in a chance of a rate cut by theECB as early as October as the European debt crisis shows nosign of relenting and the global economic outlook deteriorates.ECBWATCH Graphic on interest rate expectations link.reuters.com/pej23s EURO DOWNSIDE A close below its 200-day moving average, currently around$1.4023, should signal further declines in the euro/dollar,traders said. The pair broke and closed below this level onTuesday. The next key downside target lies at $1.38376 Rosetta Stone Korean on EBS,the euro's low set on July 12.

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