Daily Forex Overview

Previous session overview

The yen rebounded from one-month lows against the dollar in late Tokyo hours Wednesday despite the release of ugly Bank of Japan business sentiment data, as worries over U.S. car makers grew again to lift demand for safe-haven currencies.

But the dollar managed to gain versus the euro, sterling and other major non-Japanese currencies. The greenback, seen as the second safest major currency after the yen, benefited from the same concern over whether Washington will let General Motors Corp. and Chrysler LLC go bankrupt, traders said.

EUR posted a USD1.3210 to USD1.3340 rally yesterday, but perhaps the weak German unemployment and low Euro zone CPI estimate weighed later, as it drifted back to a USD1.3230 to USD1.33 range.

Pound jumped higher as market sentiment improved and GBPJPY surged back above JPY140. UK Consumer Confidence (Mar) surge to -30 it's highest since May.

Yesterday JPY traded lower pressured by rebound in equities and improving risk sentiment. JPY was also pressured by report that Japan's unemployment February unemployment hit a three-year high and by fiscal year end corporate selling. JPY weakened around year-end, as expected, USDJPY rose from JPY98 to JPY99.35.

The Australian dollar was broadly steady after a topsy turvy session Wednesday, with the currency jolted by conflicting domestic data, jawboning by New Zealand's central bank and jitters surrounding the U.S. auto sector.

Market expectation

The euro is lower on Wednesday, reversing a bounce higher against the dollar Tuesday as equity markets managed to rebound and appetite for risk revived despite more gloomy economic developments. Dealers described Wednesday's decline in the euro against the yen and dollar as a momentary safe-haven play given the U.S. auto sector woes.

In euro-sterling, daily studies continue to turn lower, placing pressure on the 21-day moving average, which provided good support for a bullish session last Wednesday and now moves up to stg0.9225. This level remains in focus and while above here, bulls will seek a return to stg0.9480. Break below exposes 50% level at stg0.9059.

EURJPY is holding well over the top of the Ichimoku cloud with Ichimoku studies positive while above JPY121.50, although daily studies are weak and show continued signs of near-term pullback to encourage bears to target the 21-DMA at JPY128.40 ahead of Fibonacci levels at JPY125.95 and JPY123.30.

The Australian currency faces another slew of event risk in coming days, beginning with the European Central Bank's monthly policy meeting and the G20 meeting in London Thursday and U.S. nonfarm payrolls data Friday.

Most important events of the day