Daily Forex Overview

Previous session overview

On Wednesday, the euro rebounded versus the dollar on a rise in U.S. stocks in volatile trading.

The common currency wavered between gains and losses against the dollar, following swerving investor risk appetite, reflected in equities markets.

Investor sentiment was ultimately revived by news that the U.S. Senate and House of Representatives resolved their differences on the stimulus plan.

EURUSD closed the NY session Wednesday at USD1.2906 with rate coming under early downside pressure on expected euro-yen sales from a returning Japanese market (closed Weds for Foundation Day) with rate easing to early lows of USD1.2858. Rate bounced off lows, the move up initiated by strong demand for Aussie, prompted by the release of stronger than forecast Australian jobs data.

On Wednesday, Japanese markets were closed for the National foundation holiday. However, as tensions ease during the US trading hours, USDJPY recouped the earlier losses and closed the session at JPY90.40, almost unchanged from the JPY90.47 close on Tuesday.

Pound closed in NY at USD1.4396 with rate coming under early pressure on anticipation of sterling-yen, repatriation flows from a returning Tokyo market. Rate dropped down to USD1.4335, the move seen in tandem with euro-dollar, with the bounce back sparked by a strong rally in Aussie on the back of better than expected headline jobs data. Cable rallied to a high of USD1.4419 before momentum faded with rate eased below USD1.4400. Rate met support around USD1.4350 before bouncing back again, getting an added kick higher to USD1.4400 in early Europe.

The Australian dollar was weaker in Asian trade late Thursday after the country's Senate rejected the government's proposed economic stimulus package.

Market expectation

The euro is mixed Thursday on the view that the European Central Bank is likely to lower rates more.

For EURUSD resistance seen between USD1.2920/30, more toward the overnight high at USD1.2944, with interest said to extend up to USD1.2960. Above here and rate can push on toward Wednesday's highs at USD1.2998, with offers placed toward USD1.3000. Support USD1.2880, more between USD1.2860/50 ahead of USD1.2835/30.

EURGBP trade in Asia was contained within a range of stg0.8960/90, with early dealing into Europe continuing to respect these parameters, though currently pressing up against the topside. Rate currently trades around stg0.8990, seen in consolidation mode after recent recovery extended to stg0.9032 Wednesday. Resistance remains at stg0.8990, a break above stg0.9000 to open a move on toward stg0.9030/35 ahead of stg0.9050 and stronger area between stg0.9075/85. Support stg0.8960, ahead of stg0.8945/40.

Hearing from several sources that EURJPY now that earlier noted stops through JPY115.80 are well flagged in the market. Euro-yen currently hold back around JPY116.40 after finding a base at JPY115.95 in late Asian dealing.

The outlook for the Australian dollar over the next few weeks remains downbeat with a number of broader indicators pointing to weakness in the domestic and global economies, analysts said.

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