Daily Forex Overview

Previous session overview

The US dollar and Japanese yen rocketed higher on Tuesday due to a jump in risk aversion, a threat that has continued to linger in the markets for months.

EUR almost reached USD1.31, before turning around to USD1.2830. Euro-zone negative news yesterday included rumors (denied) of Russian credit defaults, and UBS's USD17.2 billion annual loss - the largest ever in Switzerland.

British pound remained under pressure throughout the day and fell to as low as USD1.4456 versus the dollar and to JPY130.41 against the yen.

The yen, a key safe-haven currency, soared across the board overnight, but pared gains against the greenback and fell in early Asian trade. Japan's markets are closed Wednesday. The dollar fell 1.3 percent against the yen to as low as JPY90.13 while the single currency dropped to JPY115.78 versus the yen before stabilizing.

Disappointment in financial markets over the U.S. administration's financial rescue package unwound most of the Australian dollar's recent gains in late Asian trade Wednesday. The Australian dollar was quoted at USD0.6557, down from USD0.6685 late Tuesday.

Market expectation

The euro is lower against the dollar and yen Wednesday, as global risk aversion ticked up and stock markets fell.

EURGBP move extended to stg0.8978 into early Europe, as cable dropped to USD1.4398, but has been able to correct below stg0.8960 but underlying tone remains positive. Resistance seen placed at stg0.8980, more toward stg0.9000 and stg0.9010/15. Support seen placed back at stg0.8900, stronger at stg0.8865/50.

Cable currently trade around USD1.4410 and euro-sterling trade between stg0.8960/65. Cable support seen placed between USD1.4400/1.4390, a break to open a deeper move toward USD1.4365/50 ahead of USD1.4330/20. Resistance seen placed at USD1.4450, stronger between USD1.4480/85.

Technical analysts for EURUSD offers seen placed to USD1.2940, more toward USD1.2960/65 ahead of USD1.2980/85 then USD1.3020. Support USD1.2900, more between USD1.2880/70 ahead of USD1.2850/35. Further demand seen placed to USD1.2800, an option barrier at USD1.2700 continuing to be mentioned.

The euro may also find support not far from current levels, said analysts, given the current uncertainty in the market and speculation on limited rate cuts by the European Central Bank, but also expects the euro to remain range bound between USD1.2800 and USD1.3000 over the next few days.

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