Daily Forex Overview

Previous session overview

The single currency surged against the dollar to as high as USD1.3737 after European Central Bank Chief Jean Claude Trichet signaled in a newspaper interview published on Monday that ECB remained wary of interest rates falling to zero.

The euro surged against the yen to a fresh high of more than five months in Asia Tuesday as investors piled on to buy the common currency, which often tracks share price gains, with Japan's benchmark Nikkei 225 Stock Average up 2.1%.

Rising Asian share markets following the Dow Jones Industrial Average's close up 6.8% overnight also prompted players to sell the low-yielding, safe-haven yen and dollar for other higher yielding units such the Australian and New Zealand dollars, dealers said.

EUR failed to breach recent highs, market chatter on option barriers at USD1.3750-1.38, as well as Russia selling, keeping it in check; after USD1.3738 it fell to USD1.3485, but sits back around USD1.36.

Pound was very well supported as GBPJPY buying and EURGBP selling helped the cable to test USD1.4600. Key resistance at USD1.4660 is forming and will provide the next key trigger for topside moves.

The Japanese Yen came under severe pressure as stocks staged major rallies around the world. USD weakness kept USDJPY under pressure initially but +5% gains overwhelmed and the pair ended above JPY97.

The Australian dollar extended a two-week rally Tuesday, touching a fresh 10-week high after Wall Street posted its fifth biggest one-day points gain on record Monday. No longer simply a weak U.S. dollar story, market strategists say easing risk aversion and strong commodity prices has favored the Australian dollar, making it one of the strongest performing currencies globally this week.

Market expectation

The euro is surging against the yen to a fresh high of more than five months Tuesday as investors piled on to buy the European currency, which often tracks share price gains.

Meanwhile the British pound, which surged to JPY143.99, its highest level against the yen since Dec. 1, was gaining on the coattails of the neighboring euro, despite being a lower yielding unit.

For EURUSD traders report small offers in the USD1.3710 area, with decent stops through USD1.3725/35, though last week's highs in the USD1.3740 area still need to be taken out for an attempt at USD1.3750/1.3800 barrier interests. Bids are at USD1.3610/00, with decent interest to pick up the dip then coming in at USD1.3550/40.

European session sees cable trading back around USD1.4640, with Technical analysts seeing the 100-day moving average as key at USD1.4633, suggesting a close above for the first time this year would be a positive signal. Key area topside seen placed at the February highs around USD1.4975. Focus is back on the downside for euro-sterling into Europe as the cross slips back to test the late Asia lows at stg0.9282. A break below stg0.9280 can expose reported demand in the stg0.9260 area.

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