Daily Forex Overview

Previous session overview

On Wednesday, the dollar came back after a Federal Reserve statement offered little new, spurring a bout of relief rally in the greenback. However, the euro held above USD1.3100.

The Euro retested the USD1.33 key level but was rejected quite violently as the FOMC statement helped the USD.EUR's fall, post FOMC, and took it from USD1.33 to USD1.31in less than an hour. EURUSD traded with a low of USD1.3104 and a high of USD1.3328 before closing the day at USD1.3160.

The Sterling pushed higher after tripping stops above USD1.4250. The market was very bullish and tested supply at USD1.4350 that held until the late USD forced some profit taking.

The Japanese Yen was sold across the board as risk sentiment improved and the market bought up high yielding currencies.

The Australian dollar weakened in late Asian trade Thursday, ending a four-day rally, as a combination of profit taking and flight-to-safety flows drove investors away from higher-yielding currencies. The fall in the Australian dollar also comes amid intensifying expectations of a substantial interest rate cut at the Reserve Bank of Australia's first meeting of the year next week.

Market expectation

The euro remains under pressure Thursday after the Fed's moves on Wednesday, but dealers question whether the dollar can sustain its momentum. For now, the euro is seen in a range of around USD1.3100 to USD1.3300.

Market participants noted that investors had sold the dollar prior to the Fed statement amid some concern that the U.S. central bank may announce more unconventional measures to relate the weakening economy.

EURUSD knocked through overnight lows of USD1.3081 on reported Asian sovereign supply. Same name was a mentioned seller Wednesday into rallies above USD1.3300, along with a major Asian account. Euro-dollar extends lows to USD1.3051, meeting reported demand from bids placed between USD1,.3055/50. Below here and rate can ease toward USD1.3030/20. Expect some resistance now around broken support at USD1.3080, more toward USD1.3120.

GBPUSD managed to recover to USD1.4140 into early Europe before another round of general dollar demand provided the weight to take it to fresh intraday lows of USD1.4074. Rate currently holds around this level. Support seen placed at USD1.4070, more toward USD1.4050 ahead of USD1.4030/20. Resistance placed at USD1.4140/50.

For EURGBP support seen placed at stg0.9225/20, more between stg0.9205/00. Resistance placed stg0.9290/00, more toward stg0.9320 then stg0.9350.

Traders will look ahead to Germany's January unemployment data, with the unemployment rate creeping higher to 7.7% from 7.6% and the unemployment change climbing to 30k from 18k. The Euro zone consumer sentiment indicator is seen deteriorating to -31 from -30, while the business climate is also seen weakening, falling to -3.5 versus -3.17.

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