Daily Forex Overview

Previous session overview

The euro fell from a one-week high against the yen in Asia Tuesday as Japanese stock markets declined despite a positive earnings report from Goldman Sachs, prompting speculators to buy the safe-haven Japanese currency.

The European currency earlier rose to a one-week high of JPY134.33 as some speculators bought it on expectations that decent earnings posted by the major U.S. investment bank would help push regional stocks higher, dealers said.

On Monday, a lot of markets were still closed for a prolonged Easter holiday weekend. The US stock markets were open, but their performance was not really impressive. Global investor sentiment is still the main driver for currency markets and yesterday, the non-safe haven currencies like the euro, but even more the Aussie and the Kiwi dollar took a strong start of the new trading week. Especially during the US trading hours, the euro performed quite an impressive rebound and closed the session at USD1.3368.

The Pound surged out the recent trading range breaking above USD1.4800 as improving banking sentiment supported. USD1.5000 looms as the topside target although sustained gains will require US banking results to be shock free.

Since the end of last week, USDJPY also didn't show any clear trend. The pair held in a sideways trading pattern close to the 100-mark. The pair yesterday declined/stabilized while US stock markets recouped the earlier losses. The currency pair closed the session at JPY101.10, little changed from the JPY110.24 close on Friday.

The Australian dollar held onto most of its gains Tuesday having rallied Monday when Australian markets were closed for a national holiday, but analysts caution that the improved mood could reverse if U.S. earnings or economic data disappoint in coming days.

Market expectation

The euro is slightly lower against the dollar and yen, reflecting the conflicting opinions about how much risk is prudent at this stage in global recovery process.

Asian traders noted demand from around USD1.3315 from regional names, adding that stronger demand interest noted from around USD1.3295. Rate recovered to USD1.3365 ahead of the European open, easing back to current level around USD1.3322. Offers remain in place at USD1.3365, more from above USD1.3380, strengthening toward USD1.3395/00 with talk of stops placed through USD1.3410/15.

USDJPY resting heavy around the day's lows through the early part of the European session, as euro-yen also trades with a heavy tone. Quiet start reported, with light volumes going through. Dollar-yen bids said to come in around JPY99.40/35 with stops below. Support then seen at the 200-day moving average (JPY98.95). Light offers come in on approach to JPY100.00, with topside stops reported through JPY100.45.

Currency players will now watch for a series of first quarter earnings results from other U.S. financial firms including JPMorgan Chase due out on Thursday and Citigroup on Friday.

If their financial performance disappoints investors, causing global stocks to decline, the euro could fall to JPY130.00 and the greenback to JPY99.00 over the near term, traders said.

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