Daily Forex Overview

Previous session overview

On Monday, the euro and U.K. pound gained against the dollar on heightened risk appetite as investors awaited the details of the U.S. administration's financial rescue package.

Traders in Sydney and Tokyo cited a report in the Nikkei which quoted the head of Russia's biggest banking association as saying Russian banks and businesses may ask foreign banks to reschedule loans worth USD400 billion. The British pound and Swiss franc were also hurt against the U.S. dollar and the Japanese yen, due in part to their geographic proximity to the Russian woes.

The single currency rallied from 1.2874 to 1.3095 against the U.S. dollar on active cross buying in euro especially versus the Japanese yen and Swiss franc.

The British pound rose to a four-week high of 1.4986 after Barclays Plc, the third-biggest U.K. bank by assets, said second-half profit rose more than analysts estimated.

The Japanese Yen tested resistance above 92 early in Asia but smaller than forecast gains in Asian stocks and profit taking sent most crosses lower.

The Australian dollar was little changed in late Asian trade Tuesday as concerns about the state of the Russian banking system eroded earlier gains on the back of a recovery in commodities prices and risk appetite.

Market expectation

There was selling of the euro and Australian dollar by Japanese companies and institutional investors, with this likely to continue in the lead-up to the Japanese fiscal year end in March.

EURUSD touched a low of USD1.2810 before settling between USD1.2840/80. Resistance seen placed at USD1.2880/1.900, USD1.2950. Support USD1.2810/00. Barrier USD1.2700.

EURGBP eased from early Asian highs around stg0.8730 to stg0.8637 as cable was able to cushion the effects of risk aversion trade better than the euro during the Asian session. The move lower however has attracted profit take buying which has helped rate to recover back to stg0.8680. Resistance seen placed at stg0.8685, a break above to open a move on toward stg0.8695/00 ahead of stg0.8710 and stg0.8730. Support seen placed at stg0.8660, stronger between stg0.8640/35 ahead of stg0.8605/00.

Cable recovered to USD1.4870, easing to USD1.4820 before getting a late Asia lift to USD1.4870 into early Europe. Support seen placed at USD1.4820, more between USD1.4780/70 ahead of USD1.4750. Resistance seen placed at USD1.4880, stronger between USD1.4905/15, with stops above USD1.4920.

Investors globally remain largely tuned into developments surrounding the progress of U.S. President Barack Obama's stimulus package. Treasury Secretary Timothy Geithner is expected to unveil the finer details of the plan later Tuesday.

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