ForexLive New York wrap-up: EUR/USD bounces after 1.4800 attack

• Rumors of Ukraine debt default hits EUR at New York open
• ECB tightens rules on acceptable asset-backed securities collateral as of March 2010
• ECB’s Constancio: Inflation under control; not signaling market that removing non-conventional measures will lead to changes in conventional policy
• Fitch: Unaware of any default which would impact Ukraine’s sovereign debt
• ECB’s Bini Smaghi: ECB exit will be gradual
• Canada’s Flaherty: Recovery cannot survive without stimulus
• US equities recover intraday losses, end down 0.3%

EUR/USD fell to graze the 1.4800 level after talk that Ukraine had defaulted on its sovereign debt swept the markets. With European banks heavily exposed to the East, traders sold first and asked questions later. Prices rebounded but did not get back into the neutral zone–which I define as the area between 1.4925 and 1.4975– at the close. Rebounds were unable to overcome resistance at 1.4875/80. Trendline support dating back to March comes in just below today’s lows, at 1.4793. That line rises to 1.4805 on Monday.

Commodity currencies fell with the EUR. AUD/USD tumbled below 0.9100, falling to 0.9058 before a bounce. A solid close in gold prices and a bounce-back in equities helped AUD close near 0.9150. CAD underperformed with both the BOC and the government seeing signs of economic drift ahead.

Lousy UK public finances as well as ongoing position adjustment out of risky currencies weighed on cable, which closed at 1.6505. 1.6458 was the risk-aversion driven low.

USD/JPY range-traded between 88.90 and 89.10.