Daily Forex Overview

Previous session overview

The single currency strengthened against the greenback on Friday as U.S. stocks wrapped up their best week since November, prompting investors to take on more risk and liquidate long positions on U.S. dollar.

Markets saw minimal reaction to comments by U.S. Federal Reserve Chairman Ben Bernanke in a television interview.

The euro spent much of Friday consolidating against the US dollar in a range of USD1.2875 - USD1.2935, as the early-morning release of Euro-zone retail sales didn't have much of an impact on the currency. Retail sales rose less than projected in January at a rate of 0.1 percent, while the annual rate edged up to -2.2 percent from -2.4 percent.

The Sterling with no data out on Friday the GBP took its cue from the share market pushing higher back above USD1.4000.

The Japanese yen ended the past week off on a mixed note, as the currency gained versus the US dollar, British pound, and Swiss franc but fell against the Canadian dollar, euro, Australian dollar, and New Zealand dollar.

Firmer regional equities helped the Australian dollar push higher during Asia trading Monday in a quiet session, as traders await central bank policy statements to set a firm course for the coming week.

Market expectation

The euro and dollar are holding steady against each other and against the yen on Monday as markets wait to see whether last week's stock market rally has legs.

A weekend meeting of finance ministers and central bankers from the Group of 20 took few fresh steps to deal with the global financial and economic crisis. It was a lot of talk and few specific or clear prescriptions; while the intentions were good, the markets are looking for action and sadly where the euro zone is concerned officials haven't been able to come out with consensus on stimulus measures, said analysts.

EURUSD extended early gains to USD1.2948 with traders noting offers placed to USD1.2950, with further interest extending to USD1.2960. Through here and rate can edge on toward USD1.2990/00. Talk that USD1.3000 holds the strike of a decent sized option expiry for the 1400GMT cut. Rate currently trades around USD1.2928. Support now seen placed at USD1.2910/00.

For USDJPY light bids in the JPY98.00 area now eroded as dollar-yen makes a brief show underneath, though momentum so far lacking to take the move further as the rate recovers back to JPY98.10. Next area of demand comes in around the Asian base at JPY97.50/55, further bids then noted into JPY97.15/10.

Pound moves up to challenge the resistance area between USD1.4070/80, the rate having been rebuffed from this area in early Europe, with some of the weaker spec longs squeezed out on the pullback to USD1.4050/40. A break of USD1.4080 to open a potential move toward USD1.4155, technical traders suggested, with interim resistance seen at USD1.4100 and USD1.4120/30.

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