Daily Forex Overview

Previous session overview

On Tuesday, the powerful rally in stocks left the dollar lower as investors warmed up to taking some risk. But the dollar did manage to regain much of its early losses as an illustration that underlying concerns persist.

On Tuesday, investors focused on the overall improvement in global market sentiment.

EURUSD started the session with a positive bias. Later in the session, the positive headlines on Citi group temporary propelled EURUSD above the USD1.28 mark. Rather soft headlines from ECB's Weber might have played a role. Nevertheless, EURUSD declined further after the European close. The pair closed the session at USD1.2682, compared to USD1.2611 on Monday.

The British pound was unable to stage any recovery and subsequently dropped for a test of USD1.37 against the greenback yesterday. Economic news out of the UK was disappointing as UK industrial production fell more than expected a rate of 2.6 percent in January.

Non-Japanese hedge funds pushed the euro down to an intraday low of JPY124.28 from JPY124.94 in New York late Tuesday, before it recovered to around JPY124.70, dealers said.

The Canadian dollar rallied against the greenback as oil prices rose and risk-aversion lessened amongst investors again after Citibank's announcement of a profitable first quarter in 2009.

The Australian dollar was higher Wednesday in Asia, despite losing much of its gains late in the session on news of a sharp deterioration in China's trade surplus in February.

Market expectation

The euro is slightly lower against the yen and dollar on Wednesday, but the fall is seen as temporary because dealers traced it to selling by Japan's exporters for regular payments.

Traders added that U.S. investors' move to bring back their money home by offloading foreign assets - one key driver of the dollar's recent broad appreciation - appeared to be subsiding, dealers said.

EURUSD currently trades around USD1.2650. Bids seen placed from below USD1.2620, with stronger interest seen placed between USD1.2610/00. Below here and rate can ease toward USD1.2580 ahead of USD1.2550. Resistance seen between USD1.2650/60, a break above may allow for a move on toward USD1.2680/85 ahead of USD1.2700/10.

Traders noting that main demand for dollar-yen under JPY98.50 came from option players, though exporters are still said to be keen to sell above JPY99.00. Dollar-yen holding around JPY98.60 currently, with the JPY97.90 double-day low seen as key support. Stops reported under here, with bids then coming in around JPY97.60.

For EURGBP support seen toward stg0.9200, a break may allow for a deeper pullback toward stg0.9180 ahead of stg0.9150. Resistance remains toward stg0.9250/55, a break to open a move toward stg0.9290/00.

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