Daily Forex Overview

Previous session overview

On Wednesday, the pound fell to its lowest level against the dollar in more than 23 years, but regained its footing late in the day to eke out a modest gain.

The pound has come under intense selling pressure since Monday - down 12.7% from Monday's intraday high - after the U.K. government introduced a bailout package that investors have little hope will save its banks or the economy.

Cable dropped to USD1.3840. Rate recovered through the mid part of the Asian session to around USD1.3980 before again slipping back, pivoting around USD1.3900 ahead of the European open. Rate managed to trade up to USD1.3940 before Europe provided the weight to take it back below the figure, added momentum on break of USD1.3840 taking it on to USD1.3825 (50% USD1.3620/1.4030).

The euro continues to trade within its recent ranges, deriving strength from the pound's weakness. EURUSD traded with a low of 1.2826 and a high of 1.3085 before closing the day at 1.3030.

The Japanese yen saw a surge in volatility on Wednesday, as the currency rocketed higher across the majors during the morning to touch record highs versus the British pound, 13-year highs against the US dollar and Canadian dollar, and 6-year highs versus the euro.

The Canadian dollar tumbled against its US counterpart as the greenback rallied against a range of currencies as investors sought safety amid growing worries over the global economy.

The Australian dollar was trading at USD0.6576, up from USD0.6529. Against the yen, it was trading at JPY58.57, just below JPY58.695.

Market expectation

The euro is lower against the dollar and yen Thursday but market speculation was rising over whether the authorities in Tokyo were growing uneasy about the yen's gains.

For EURUSD resistance currently trading between USD1.3030/40 and break can open a move toward Asian highs at USD1.3068 ahead of NY highs at USD1.3087. Talk that main offers placed toward USD1.3100 from a UK clearer. Support USD1.3000, more toward USD1.2980 ahead of area between USD1.2965/45 (USD1.2944 Asia pullback low). Below this area can open a deeper move toward USD1.2925/20 ahead of USD1.2885/80.

Pound currently trades around USD1.3840. Support USD1.3825/20, more between USD1.3780/70 ahead of USD1.3750 and USD1.3720. Resistance noted at USD1.3880, more toward USD1.3900.

There are no major indicators for the UK due to be released on Thursday, but given the sheer extent of the British pound's recent declines and quick reversal from its multi-decade and record lows, the currency may be in store for further gains in the near term.

A rebound in equities helped the Australian dollar gain in Asia trade Thursday, but analysts cautioned still fragile sentiment could reverse the pickup offshore.

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