Daily Forex Overview

Previous session overview

On Monday, the dollar made significant advances versus its rival on a flight to safety, but corrected down against the euro after sharp overnight gains.

The euro was one of the only currencies to gain against the US dollar on Monday, but only after EURUSD bounced from rising trend line support at 1.2705 while EURGBP recovered from Fibonacci support near 0.8800.

EUR formed a base around 1.27, before rebounding to 1.29. Le Monde reported France's Sarkozy's concerns regarding the cohesion of the Euro area.

The British pound is easily one of the most volatile currencies in the market right now, as it tumbled against the US dollar, euro, and Japanese yen amidst heightened financial market concerns. GBPUSD traded with a low of USD1.4055 and a high of USD1.4439 before closing the day at USD1.4280.

The greenback fell against the Japanese yen from JPY90.06 to JPY88.80 on active cross buying in jpy especially versus the single currency and sterling in European morning before rebounding to JPY89.99 after the a better-than-expected reading on U.S. manufacturing data.

A burst of fiscal and monetary stimulus measures unveiled by policymakers Tuesday boosted the Australian dollar in Asia, as traders bet the commodity-based economy may escape the brunt of the global recession.

Market expectation

The euro is gaining Tuesday with the help of the BoJ's plan to buy bank-held shares.

EURUSD currently trades around USD1.2825. Resistance seen placed between USD1.2850/60, more around USD1.2880 ahead of USD1.2900 and earlier rally highs at USD1.2914. Support USD1.2800, a break below to open a deeper move toward USD1.2785/80 ahead of USD1.2755/45.

The GBP may be shrugging off ECB Alumnia's suggestion that sterling may join the EUR in the near future. But, says analysts, it remains bearish of the GBP and suggests selling it against the USD rather than the EUR as EURGBP has proved fairly capped for now in the 0.95 region.

GBPUSD currently trades around USD1.4190. Bids remain in place at USD1.4170 (USD1.4175 50% USD1.4052/1.4298), with further interest seen placed to USD1.4150, stops on a break of USD1.4140. Further demand noted between USD1.4110/00. Resistance seen placed at USD1.4200, a break to allow for a move on toward USD1.4225/35 ahead of USD1.4250 then USD1.4270/80.

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