-- Euro reaches new March high as Italy meets solid demand for its bonds -- Markets still digesting Fed chief's downbeat comments -- Pound approaches $1.60 but meets options-related selling By Alexandra Fletcher Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The euro rose to a new March high against the dollar in European trading Tuesday, boosted by a well-received Italian government bond auction as the previous day's downbeat comments by the Federal Reserve chairman continued to gnaw away at the greenback. The euro jumped to as high as $1.3385 against the dollar after Italy sold EUR2.817 billion of zero-coupon bonds near the upper end of its target range and allocated a maximum planned EUR1 billion of indexed-linked treasury bonds. Also having an impact was Fed Chief Ben Bernanke's speech late Monday which played up the ongoing weakness of the U.S. labor market, opening the door for a third round of quantitative easing, and drove down support for the buck against commodity-linked currencies like the Australian dollar and emerging market currencies like the Polish zloty. "Bernanke's comments addressed the markets dismissal of QE3 and has given investors the opportunity to sell the dollar this week, especially as the [economic] data calendar is light," said Daragh Maher, a foreign exchange strategist at HSBC. Sterling also benefited from Bernanke's comments and approached the key-psychological level of $1.60 against the dollar, but determined selling by banks protecting options-related positions held it back, according to traders who also pointed to rumors that the U.K. government may sell part of its 82% share in Royal Bank of Scotland. Data in the form of U.K. retail sales data had little effect on the pound, but showed volumes were steady during March. Meanwhile, the euro clung onto to its overnight gains against the Swiss franc after the Swiss economy minister said he wanted the franc to weaken toward CHF1.35-CHF 1.40 against the euro, pushing the cross above 1.2060 from below 1.2050. Although starting from a very low level, the implied volatility on euro-Swiss franc options also crept higher, pointing to further possible gains in the pair in the coming weeks. The Turkish central bank held its key interest rate at 5.75% as expected. The dollar weakend against the lira a little, but bounced back shortly afterwards. Looking ahead, Hungary is also expected to hold its interest rate policy meeting at 1200 GMT. At 1141 GMT, the euro was trading at $1.3362 against the dollar, compared with $1.3358 late Monday in New York, according to trading system EBS. The dollar was at Y82.76 against the yen, compared with Y82.82, while the euro was at Y110.59, compared with Y110.63. Meanwhile, the pound was trading at $1.5973 against the dollar, compared with $1.5971 late Monday in New York. A summary of key levels for chart-watching technical strategists is below: Forex spot: EUR/USD USD/JPY GBP/USD USD/CHF Spot 1030 GMT 1.3361 82.78 1.5979 0.9027 3 Day Trend Bullish Range Bullish Bearish Weekly Trend Range Bullish Bullish Bearish 200 day ma 1.3454 79.19 1.5813 0.9073 3rd Resistance 1.3452 83.66 1.6126 0.9118 2nd Resistance 1.3415 83.19 1.6044 0.9075 1st Resistance 1.3385 83.04 1.5998 0.9053 Pivot* 1.3306 82.72 1.5912 0.9063 1st Support 1.3327 82.60 1.5943 0.9011 2nd Support 1.3286 82.56 1.5884 0.8931 3rd Support 1.3190 82.33 1.5802 0.8921 Forex spot: AUD/USD Spot 1031 GMT 1.0522 3 Day Trend Range Weekly Trend Bearish 200 day ma 1.0383 3rd Resistance 1.0671 2nd Resistance 1.0639 1st Resistance 1.0560 Pivot* 1.0502 1st Support 1.0501 2nd Support 1.0477 3rd Support 1.0414 -By Alexandra Fletcher, Dow Jones Newswires; +44 (0) 20 7842 9462, alexandra.fletcher@dowjones.com; @djfxtrader (Dow Jones Technical Strategist Francis Bray contributed to this story.)

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