Daily Forex Overview

Previous session overview

The U.S. dollar and euro were up a bit against the Japanese yen after a drop in the U.S. dollar in New York amid confusion over U.S. Treasury Secretary Timothy Geithner's comments.

Geithner initially appeared willing to entertain a Chinese proposal that an international currency supplant the U.S. dollar as the key global reserve currency, but later added "the dollar remains the world's dominant reserve currency (and) I think that's likely to continue for a long period of time."

A turbulent NY session ended with euro-dollar closing around USD1.3585, in the middle of a 200-point range after the market misconstrued US Geithner comments on SDR's. Traders said the rate was contained within USD1.3575/90 for the opening part of the Asian session, before Japanese names stepped in to buy euro-yen and sterling-yen, lifting euro-dollar to session highs at USD1.3617.

The euro rose against the yen in Asia Thursday as speculators bought back the single currency to lock in gains, but it may face downward pressure ahead of the European Central Bank's planned policy meeting next week.

The British pound saw very choppy price action on Wednesday and ultimately ended the day as the weakest of the majors.

The Japanese Yen was very contained against the USD with the USDJPY falling slightly as the Dollar weakened but crosses found strength from equity market gains.

The Australian dollar made modest gains in the late Asian session Thursday helped higher by yet another rally in equities and commodities prices that has more investors pondering the possibility of a turnaround in global market sentiment.

Market expectation

The euro is mixed Thursday after the commotion and confusion over the U.S. position on its currency.

Early European dealing sees the EURUSD edging marginally higher to sit mid-range around USD1.3580. Some light stops noted through USD1.3530 now, with a mixture of bids and stops in the USD1.3500 area. More significant stops said to come in on a break below USD1.3400.

Technical analysts comment about GBPUSD that Daily studies are showing some early signs of topside failure, although there is no bear-cross yet and the market is back under the top of the Bollinger band, currently at USD1.4750. While the highs remain at USD1.4780, bear's will seek a pullback to Fibonacci levels at USD1.4351, USD1.4219.

Over the mid-term, some traders expect that the yen may trend lower versus the euro and the dollar. They said U.S. and European institutional investors who have accumulated Japanese stocks over the years on expectations of stronger growth will likely keep selling them because of worries over Japan's continuously falling exports.

Overseas investors may withdraw more funds from Japan if the Bank of Japan's tankan survey of business sentiment due on March 31 delivers poor results, dealers said.

Most important events of the day