Previous session overview
The Dollar started weak into the Asian session. EURUSD continued where it left off on Friday and rose to a high of 1.3736 from its opening level at 1.3630 before the European session started. The Pound sterling followed suit and reached 1.4626 shortly after Tokyo lunch, the highest level since February 23rd.
USDJPY had a very active session in Tokyo. The pair initially opened at 95.60 and nearly 100 pips to 96.56 fuelled by fear the Bank of Japan could act in order to stop its currency from strengthening. Such rumors could not be confirmed as the Dollar was sold and the pair fell back to 95.70 before Europe took over. The Swiss Franc meanwhile traded along its European counterparts, strengthening to 1.1178 from Fridays closure at 1.1270.
Market expectation
Initial reaction in Europe this morning was to take profit on short Dollar positions. After the Euro gained over 6% over the course of last week, traders see limited potential for additional rise from the current high levels. EURUSD currently stands at 1.3650, strong resistance is seen at 1.3730, a lift above that level may see the pair continue towards 1.40. Minor support is seen at 1.3580 and 1.3450 with space to explore down to the rising trend line near 1.32.
Cable strength has been less pronounced and market talk about very strong resistance levels ahead of the psychological 1.50 mark has so far kept the GBP progress limited, the British currency gained roughly 4.5% against the US Dollar and the economic outlook in England remains ambiguous at best. To the downside GBPUSD may find support at 1.4440 or 1.4300. A dip lower risks a return to the 1.40 pivot area.
After the Swiss attempted to weaken their currency two weeks ago and last weeks FOMC decision caused the Dollar to tumble. Market focus shifts to the Bank of Japan, who do not desire for the YEN to strengthen beyond key support of 93.00. The risk is a push lower to see recent Dollar buyers run for cover and drive the pair towards 87.00. While the support holds, USDJPY should return to test resistance at 100, ending Japanese fiscal year at the end of March above that mark, would reduce pressure on Japanese exporters.
USDCHF finally is expected to trade neutral between 1.1080 support and 1.1440 resistance. The Swiss National Bank main concern being EURCHF, we doubt additional intervention will be seen on the basis of a falling US Dollar. To the downside, long-term rising support now lies at 1.0850. A strengthening Dollar can see the pair rise through 1.14 to retry the 1.18/1.20 resistance area.
No major market releases on the agenda today.
Most important events of the day
| 23-Mar | Count. | Event | For | Unit | Imp. | Act. | Cons. | Prev. |
| 7:00 | GB | Nationwide house prices (nsa) (23rd-31st) | Feb | % y/y | Low | -17.6 | ||
| 7:00 | GB | Nationwide house prices (sa) (23rd-31st) | Feb | % m/m | Low | -1.8 | ||
| 8:30 | DK | Consumer sentiment | Mar | index | Low | -9 | -11.3 | |
| 9:00 | IS | Wage Index | Feb | % m/m | Low | 0.6 | ||
| 9:00 | IS | Wage Index | Feb | % y/y | Low | 7.5 | ||
| 12:00 | DE | ECB Governing Council Member Weber to attend a German Parliament Committee hearing on consumer credit rules | Low | |||||
| 12:30 | CA | Leading indicator | Feb | % m/m | High | -0.9 | -0.8 | |
| 14:00 | US | Existing home sales | Feb | mn | Low | 4.49 | ||
| 14:00 | US | Boston Fed President Rosengren to testify before the House Financial Services Committee on "Seeking solutions: Finding credit for small and mid-size businesses in Massachusetts" | Low | |||||
| 22:30 | AU | RBA Assistant Governor (Financial System) Lowe speaks before the Cards & Payments Australasia 2009 conference, Sydney | Low | |||||
| 23:30 | EU | ECB President Trichet to take part in a conference on "Financial crisis and commodity prices - Economic implications and policy progress" at the Eurosystem-Latin American Central bank seminar in Mexico | Low | |||||
| 23:50 | JP | BoJ release minutes from prior (18th-19th Feb) MPC Meeting (08:50 JST on 24th Mar) | Low |
