Daily Forex Overview

Previous session overview

On Monday, the dollar rose versus the euro and the U.K. pound on new worries over banks in Europe, and as investors began to sense the U.S. may recover from a global economic slowdown before other countries.

Comments Monday from Federal Reserve Chairman Ben Bernanke echoed this sentiment, helping send the euro to a six-session, intraday low against the dollar, under USD1.33, and leaving the pound at a one-week low.

EURUSD fell more than -100 pips in NY trading and was sitting near the 1.3335/40 zone into the close. The 1.3250/60 area is the next critical support as this is the 2008 lows which printed in early October.

The Sterling rally during the Asian session was capped going into Europe by concerning Economic data. Public sector Borrowing blew out to 8.1B from 6.9B expected the biggest 6 month budget deficit since WW2. GBPUSD traded with a low of 1.7107 and a high of 1.7516 before closing the day at 1.7150.

The Japanese Yen was sold for most of the day against the USD as equities recovered. USDJPY traded with a low of 101.37 and a high of 102.42 before closing the day around 102.10.

The Australian dollar was weaker late Tuesday as the central bank broadly reaffirmed its monetary easing bias and its concerns about the broader health of the global economy. Minutes for the Reserve Bank of Australia's October meeting at which it cut the cash rate by a whole percentage point released Tuesday showed the central bank remains deeply concerned about the threats to economic growth.

Market expectation

EURUSD talk emerging of stops having built from below USD1.3285, with this interest said to stretch down to USD1.3200. Note that interim support seen placed between USD1.3260/50, covering the deepest pullback low at USD1.3258 (Oct10) since the posted life high at USD1.6040.

The euro is trading in narrow ranges Tuesday against the dollar and yen as dealers try for quick gains on the crosses in the absence of big moves in the majors. Currency players have focused on stock price movements for clues to the near-term direction of the greenback and euro in the absence of major economic indicators from the U.S. and Europe this week.

Dollar-yen fell to JPY101.54 in Asia, early Europe then providing the momentum for a move to JPY101.43, with the rate remaining heavy at time of writing. Bids placed around Monday's lows at JPY101.36 are now under pressure, with stops then coming in through JPY101.30. Technical analysts then note the 38.2% retracement of the October rally coming in at JPY101.08. On the topside, system funds are said to be looking to buy on a break of JPY102.25, offers then noted at JPY102.40/50, stronger into JPY103.00/10 with stops through JPY103.25/30.

USDJPY, EURJPY fall as Japanese institutional investors sell and on talk non-Japan players buying Japanese stocks (Nikkei ends +3.3%).

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