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WORLD FOREX: Dollar Under Pressure Ahead Of U.S. GDP Data

-- Dollar weakens across the board ahead of U.S. 4Q GDP data

-- Progress in Greek talks helps to boost general investor sentiment

-- But concerns over Portugal on the rise as borrowing costs soar

By Clare Connaghan

Of DOW JONES NEWSWIRES

LONDON -(Dow Jones)- The dollar remained under pressure in European trading Friday as the Federal Reserve's extended commitment to ultra-low U.S. interest rates continued to weigh on the buck ahead of key economic data, while optimism over Greece's debt restructuring talks buoyed the euro.

The dollar fell against the euro, yen and commodity-linked currencies of Australia, Canada and New Zealand ahead of the release at 1330 GMT of quarterly U.S. gross domestic product data, with market participants on their guard for any weakness that might spur a third round of quantitative Fed easing.

That's after the U.S. central bank announced earlier in the week that it would keep rates exceptionally low until at least late-2014.

"U.S. [economic] data has become unusually important for U.S. dollar exchange rate developments--as only good data seem to be able to prevent the Fed from rapidly implementing QE3," said Ulrich Leuchtmann, a currency strategist at Commerzbank.

"As Fed chairman Ben Bernanke left the door wide open for QE3 we would probably need to see a GDP figure above 3.3%...to provide positive momentum to the dollar," he said.

The consensus forecast is that the U.S. economy expanded at an annualized growth rate of 3.0% in the fourth quarter, compared with 1.8% in the previous three-month period, according to a Dow Jones survey of economists.

Also a focus were the talks between Greece and its private sector creditors over a EUR100 billion debt write-down, amid signs that the two parties were edging toward an agreement. Reassuring comments from European Union Commissioner Olli Rehn that he hopes to seal a Greek deal by the weekend helped support general investor sentiment and boosted shares and currencies perceived as high- risk bets like the pound and euro.

"Right now it feels like the whole market wants to be risk-on, so you sell dollars, you buy Aussie, you buy the Canadian dollar, you buy high risk....," said Geoffrey Yu, a currency strategist at UBS in London.

Nonetheless, doubts remained over whether the gains are sustainable, with Portugal's borrowing costs rising to euro-era highs for a second consecutive day and the Europe's economic outlook looking distinctly fragile.

"Even if we do get a deal with Greece, that's already priced in. I'm more worried about ECB [rate] expectations and growth expectations," Yu added.

In emerging markets, the broader upbeat tone helped the Turkish lira and South African rand notch up gains against the dollar, while the forint and Polish zloty firmed against the euro.

At 1130 GMT, the euro was trading at $1.3148 against the dollar, compared with $1.3109 late Thursday in New York, according to trading system EBS. The dollar was at Y76.977 against the yen, compared with Y77.46, while the euro was at Y101.222, compared with Y101.50. The pound was at $1.57165 against the dollar, compared with $1.5688 late Thursday in New York.

The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 79.158 compared with 79.405 late Thursday in New York.

A summary of key levels for chart-watching technical strategists:

Forex spot:       EUR/USD    USD/JPY    GBP/USD    USD/CHF

Spot 1121 GMT     1.3150     76.98      1.5713     0.9181
3 Day Trend       Bullish    Bearish    Bullish    Bearish
Weekly Trend      Bearish    Range      Bullish    Bearish
200 day ma        1.3583     78.55      1.5819     0.9041
3rd Resistance    1.3215     77.96      1.5845     0.9340
2nd Resistance    1.3184     77.67      1.5780     0.9270
1st Resistance    1.3161     77.28      1.5735     0.9229
Pivot*            1.3128     77.53      1.5692     0.9197
1st Support       1.3077     76.89      1.5662     0.9174
2nd Support       1.3052     76.55      1.5600     0.9156
3rd Support       1.3025     76.30      1.5536     0.9066


Forex spot:       AUD/USD

Spot 1121 GMT     1.0665
3 Day Trend       Bullish
Weekly Trend      Bullish
200 day ma        1.0247
3rd Resistance    1.0770
2nd Resistance    1.0754
1st Resistance    1.0690
Pivot*            1.0636
1st Support       1.0590
2nd Support       1.0544
3rd Support       1.0428

-By Clare Connaghan, Dow Jones Newswires; +44 (0) 20 7842 9496, clare.connaghan@dowjones.com

(Dow Jones Technical Strategist Francis Bray in London contributed to this article.)

  (END) Dow Jones Newswires
  01-27-120721ET
  Copyright (c) 2012 Dow Jones & Company, Inc.