Daily Forex Overview

Previous session overview

The U.S. dollar rose on Tuesday as investors paused to reassess the likely success of the government plan to remove bad assets from banks' balance sheets and returned to safe-haven bids on the greenback.

The euro rose against the yen and dollar in Asia Wednesday as players bought back the common currency amid a continued bullish outlook for the European unit after it retreated from recent highs overnight.

EURUSD spent much of Tuesday consolidating below USD1.3700, and based on the end-of-day break below immediate support at USD1.3450, there may be bearish potential left for the pair.

GBP was supported by stronger than expected CPI data and central bank comments of expected GBP strength, and fluctuated in a higher USD1.46 to USD1.48 range.

The Japanese Yen had a volatile day as the morning session in Asia saw most crosses testing year highs. The dollar rose to a session high of JPY98.58 versus yen and was up 0.7 percent at JPY 97.71 in late afternoon New York trade.

The Australian dollar paused for breath Wednesday, in a session dominated by fireworks in the semi-government bond market after the Federal Government offered to guarantee new and future state debt.

Market expectation

The euro is recovering on Wednesday with Wall Street stock market futures pointing higher but doubts remain about the currency's near-term outlook.

A downside break of USD1.3431 would represent a key level and could catch the market on the wrong side, said analysts.

Some players were also buying the euro, which tends to trade up on higher stocks, as Japan's benchmark Nikkei 225 Stock Average retraced earlier losses and briefly crossed into positive territory in the afternoon, dealers said.

For EURUSD attention now centered on release of German Ifo data at 0900GMT. Offers still noted into USD1.3500 with stops through USD1.3525. On the downside, trigger of stops through USD1.3430 would expose reported demand at USD1.3400/90.

Euro-sterling makes a show back above stg0.9200. 100-day moving average now seen as key support at USD1.4621, light demand then noted into USD1.4600, stronger around USD1.4550 with stops below. Offers in the cross come in at stg0.9200/05 and stg0.9240, with bids at stg0.9160, stronger at stg0.9150/45 with stops under stg0.9140.

Most important events of the day