Daily Forex Overview

Previous session overview

On Thursday, the dollar closed in on weekly intraday highs against the euro while slipping slightly against the yen in a day dominated by sustained economic gloom and the resurgence of risk aversion.

Poor risk appetite typically works to the benefit of the dollar and yen, which are considered safe-haven assets.

The euro came under significant pressure on Thursday, as the currency fell 1.5 percent versus the greenback and roughly 2 percent against the British pound and Japanese yen.

The Euro a slew of economic data pointed to a continued depressed economy with record lows sentiment readings and German Unemployment jumping 56K in December. Also weighing was an article by George Soros questioning the survivability of the EURO during the economic crisis unless a global bad bank was created.

The British pound held up fairly well compared to many of the other majors, as the currency gained 2 percent against the euro and a slight 0.34 percent versus the US dollar.

The Japanese yen climbed significantly as weak U.S. economic data and falling share prices kept investors wary of risk even as countries embraced further monetary and fiscal stimulus to boost struggling economies.

The swelling stream of bad global economic data continued to weigh on the Australian dollar in Asian trade late Friday as expectations for domestic interest rate cuts continued to mount. Market participants are currently pricing in a cash rate of just less under 2.0% by June this year.

Market expectation

The euro is lower against the dollar and yen Friday, as strategists continue to see the euro in a bearish mode.

EURUSD currently trades around USD1.2880. Risk aversion plays expected to dominate European dealing ahead of key US GDP data release this afternoon. Support seen at USD1.2875, with interest said to strengthen toward USD1.2860. A break below here can open a deeper move toward USD1.2820. Resistance seen placed between USD1.2915/25, a break to open a move on toward USD1.2940 ahead of overnight highs at USD1.2956.

GBPUSD has recovered into European dealing, edging to USD1.4265, as euro-sterling reverses overnight recovery to stg0.9084 to sit back on support in the stg0.9050/45 area. Cable support noted at USD1.4225/15, more toward USD1.4200 ahead of USD1.4185/80. Resistance had seen placed USD1.4270/80, more toward USD1.4300 ahead of USD1.4320/25. However, traders noted that corporate and real money accounts remain interested buyers on dips, with sterling's recent underlying buoyant tone retained.

Weak talk in Asia suggesting that we could see end month demand for euro-sterling from a European central bank. Support remains to stg0.9045, more at stg0.9035/30 ahead of stg0.9000. Resistance had seen placed stg0.9085/90, more toward stg0.9100 ahead of stg0.9130.

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