Daily Forex Overview

Previous session overview

The yen hit multi-week highs against the dollar and the euro in Asia Tuesday after a Wall Street Journal report that U.S. officials are pushing Bank of America and Citigroup to raise more capital fueled worries about the American banking sector.

That led to buying of the Japanese currency as a safe-haven unit. Concern over the increase in suspected swine flu cases worldwide also contributed to the yen's appreciation, traders said.

The EUR spent much of last week clawing its way higher from sub USD1.30 to a high just above USD1.33 on Friday night. We gave back all those gains yesterday with Nowotny comments one of the key drivers.

Increasing worries over the U.K. economy and country's ballooning debt weighed on the British pound on Monday and it dropped to as low as 1.4515 against the dollar and 0.8955 versus the euro.

The greenback dropped to JPY95.97, its lowest level since March 30, compared with JPY96.78 in New York late Monday. The euro plunged to JPY124.66, its weakest level since March 12 and below JPY126.22 in New York overnight.

The Australian dollar was down in late Asian trade Tuesday as concerns about the global spread of swine flu and the capital adequacy of U.S. banks eroded more of the currency's recent gains. The Australian dollar was USD0.7022 from USD0.7124 late Friday. It hit a low of USD0.6999, its weakest reading since April 21.

Market expectation

The euro continues to be plagued by risk aversion, on top of mixed signals from European policy makers, although remarks from some officials at the European Central Bank have suggested additional easing measures are likely.

Some traders are poised to push the euro below USD1.30.

For EURUSD Bids seen placed at USD1.2985/80, a break below to open a deeper move toward USD1.2950/40, though traders notes that order boards seen 'well bid' below USD1.2980. Resistance seen placed at USD1.3036, more between USD1.3045/55, a break above to open a move on toward USD1.3090/00.

GBPUSD recovered to USD1.4590 into early Europe, meeting resistance from reported offers placed between USD1.4590/00, before reversing again, this time extending lows to USD1.4545. Rate currently trades around USD1.4565. Support remains at USD1.4545/40, a break below to open a deeper move toward USD1.4515/00. Resistance remains at USD1.4590/00, a break above to open a move on toward USD1.4620/25 ahead of USD1.4650/60.

Market participants are awaiting the releases of U.S. March quarter gross domestic product data and the Federal Open Market Committee's policy decision, both due Wednesday.

Most important events of the day