Previous session overview
On Monday, the euro reversed the previous week's losses against the dollar and yen on a bounce in equities markets and after the release of some positive U.S. data, which encouraged traders to buy up riskier currencies.
The rally got under way after the euro broke the technical level of USD1.3013 in early New York trade. Traders jumped onto the bandwagon and pushed it to new highs.
EURUSD traded with a low of USD1.2863 and a high of USD1.3236 before closing the day at USD1.3200.
The British pound rallied toward 1.40 on Monday amidst a broad improvement in risk appetite and mixed news from the UK. GBP led the charge in Europe after the Barclays news, and spent the whole session moving higher, from 1.3550 to 1.40.
The Japanese Yen most of the crosses made substantial gains as majors rallied and risk appetite improved. GBPJPY jumped over 5 big figures. USDJPY was mixed as USD weakness capped any rebound seen in that pair.
A positive finish on Wall Street and better bid tone in Asian equities pushed the Australian dollar higher in quiet trade Tuesday, although analysts were lukewarm on how long the better tone would hold.
Market expectation
The euro is recovering against the dollar and yen Tuesday on hopes that Japan's stock markets will continue to improve.
EURUSD back above USD1.3200 and quickly moves on to USD1.3240. Traders note that conditions remain thin and whippy. Rate moves on to USD1.3245 at writing with overnight rally highs at USD1.3260 moving into view. Above here and rate can push on toward USD1.3290/00, traders suggested.
For GBPUSD resistance now seen placed between USD1.4090/1.4100, a break above to open a move on toward USD1.4130/35 ahead of USD1.4150. Support USD1.4040/30, more between USD1.4010/00 with stops placed on a break of USD1.3990.
EURJPY sees some bull-divergence in the daily studies with momentum threatening a bullish break of the zero line as the cross recovers the 5-DMA, which is initial support at JPY116.30.
Traders are focused on domestic inflation data Wednesday and the U.S. Federal Reserve policy meeting later that day.
Most important events of the day
| Date | Time:GMT | Currency | Indicator | Forecast | Prior |
| 1/27/2009 | 0:30 | AUD | PPI q/q | 0.40% | 2.00% |
| 1/27/2009 | 0:30 | AUD | NAB Business Confidence | -30 | |
| 1/27/2009 | 7:00 | EUR | German Import Prices m/m | -2.90% | -3.40% |
| 1/27/2009 | 9:00 | CHF | UBS Consumption Indicator | 0.96 | |
| 1/27/2009 | 9:00 | EUR | German Ifo Business Climate | 81 | 82.6 |
| 1/27/2009 | 9:00 | EUR | Current Account | -8.0B | -6.4B |
| 1/27/2009 | 11:00 | GBP | CBI Realized Sales | -53 | -55 |
| 1/27/2009 | 14:00 | USD | S&P/CS Composite-20 HPI y/y | -18.40% | -18.00% |
| 1/27/2009 | 15:00 | USD | CB Consumer Confidence | 38.7 | 38 |
| 1/27/2009 | 15:00 | USD | Richmond Manufacturing Index | -50 | -55 |
| 1/27/2009 | 16:05 | CAD | BOC Gov Carney Speaks | ||
| 1/27/2009 | 16:55 | CAD | BOC Gov Carney Speaks | ||
| 1/27/2009 | 21:00 | CAD | Annual Budget Release | ||
| 1/27/2009 | 23:30 | AUD | MI Leading Index m/m | -0.10% |
