Daily Forex Overview

Previous session overview

On Friday, the dollar gained against the yen on a rally in U.S. stocks.

The euro rose against both the dollar and yen despite the fact that data released showing that the European service and manufacturing sectors contracted in November. The euro continues to consolidate within a narrowing wedge formation that has most recently kept EURUSD contained to a tight range of 1.2450 - 1.2600.

The British pound fell briefly from 1.5061 to 1.4702 on cross trading in sterling before rebounding to close at 1.4930 in tandem with the late rally in U.S. stock markets.

The Japanese yen weakened across the board as investors used a rebound in stock prices overnight as a sign to invest in riskier currencies. In other news as expected The Bank of Japan decided to keep rates on hold at 0.3 percent.

The Canadian dollar held its ground despite oil dropping as low as USD48 a barrel. In other news Canada's CPI data for October released showing a drop to 0.5 percent as expected.

It was another volatile session for the Australian dollar in Asia Monday, as thin liquidity and lukewarm risk sentiment dominated trading before news of another banking bailout helped the unit settle higher.

Market expectation

EURUSD is inching higher Monday after news that the U.S. government has a rescue deal for Citigroup. BBH noted that EURUSD is stuck in recent range but that EUR may look more appealing if it rises past the key 1.2690-1.2725 area.

Currency analysts said any dips in the dollar against riskier rivals will be short-lived.

Euro-dollar is pushing to a fresh high of USD1.2676 before settling back around USD1.2640 (38.2% USD1.2577/1.2676) in early European trade. A break and clear below USD1.2640 to open a deeper move toward USD1.2615/00 (61.8%/76.4%). Resistance remains in place toward USD1.2680, a break above to open a move on toward USD1.2700/05, with stops suggested on a break of USD1.2710.

Support for Pound remains in place to USD1.4790, a break below to open a deeper move toward USD1.4770 ahead of USD1.4850/40. Resistance remains at USD1.4970/80, A break above to open a move on toward USD1.5000 ahead of USD1.5050/60 (USD1.5061 Friday high).

Ahead in the U.S. this week, traders would be positioning for Thursday's Thanksgiving Day holiday, where they would have at least one day of rest, and if tacking on a vacation day, a long weekend.

Most important events of the day