Daily Forex Overview

Previous session overview

On Tuesday, the euro gained on a rise in equities, despite a brief flight to safety on record low U.S. consumer confidence data.

The euro and pound were also supported by stronger-than-expected European data.

On Tuesday, EURUSD trading was affected by different, conflicting signals. The euro was well bid early in European trading. EUR rallied after the better-than-expected German IFO release, to.USD1.3330, later dampened by weaker US data, to USD1.3120. European stock markets failed to build out Monday's gains and this also capped the upside of the euro. The euro correction accelerated during the US trading hours and EURUSD closed the session at USD1.3160.

The Sterling consolidated the 5 big figure gains from Monday before pushing on in Europe as the market ceased the relentless pressure on the pound. GBPUSD traded with a low of USD1.3932 and a high of USD1.4239 before closing the day at USD1.4170.

USDJPY fell from JPY90 to JPY88.50, likely pushed by option-related flow from the same player who built the large position which expired last week.

The Australian dollar nudged higher in quiet trade in Asia Wednesday as traders bided their time ahead of the U.S. Federal Reserve's monthly policy meeting.

Market expectation

The euro is rising again Wednesday after the German Ifo data Tuesday raised hopes for a euro-zone bottoming out, dealers said.

For Pound break below USD1.4220 level can open a deeper correction toward USD1.4200 ahead of USD1.4185/80 and USD1.4160/50. Resistance placed at USD1.4285, more toward USD1.4300 and stronger interest at USD1.4350.

USDJPY, EURJPY fall as European names sell pairs, says Japanese bank dealers. But moves likely position adjustments ahead of FOMC later in day, thus won't last long, they say. USDJPY last JPY88.98, may trade in JPY88.00-90.00 band for now. EURJPY last JPY117.70, may trade in JPY117.00-118.50 band for now.

For EURUSD Resistance seen at USD1.3270 and offers said to extend to USD1.3280. A break to expose Tuesday's high at USD1.3330, with interim interest noted at USD1.3300. Support USD1.3220, more toward USD1.3200 and at USD1.3185/80. Overnight lows at USD1.3159 also noted as support.

Currency analysts say the lifetime of this latest revival of risk appetite depends on the outcome of the Federal Open Market Committee meeting Wednesday.

Traders will be paying close attention to the Fed statement, since the fed funds rate target is already near zero and there is hardly room for more cuts.

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