Daily Forex Overview

Previous session overview

The dollar and euro rose against the yen in Asia Friday as players kept selling the safe-haven currency because the threat of swine flu on the markets has not been as bad as feared.

But rises in the greenback and single currency will not last, dealers said, because much-awaited U.S. and European events next week are expected to prompt investors to sell the units again.

The USD currency was under pressure during early Europe due to month-end fixing dynamics. There was talk of country reserves managers selling USD across currencies. EUR rose from around USD1.3300 to USD1.3385, before the falling S&P500 dragged it back to the USD1.3200 area.

Sterling rose to a two-week high against a broadly lower US dollar as risk appetite resumed on positive sentiment for the global economy, which also boosted share prices.

The Japanese Yen weakened considerable in Asia as the Nikkei surge prompted USDJPY buying and majors helped the crosses extend gains. The BOJ held rates at 0.1% but cautioned that downside risks still remain. CPI (March) came out at -0.3% vs. -0.1% previously.

The Australian dollar pushed higher Friday in thin markets as traders awaited a slew of domestic data next week and the Reserve Bank of Australia's policy decision for firm direction.

Market expectation

The euro is higher against the dollar and yen, as risk-taking picks up on Friday.

Meanwhile, the euro is also likely to face downward pressure next week because of the European Central Bank's policy setting meeting.

The U.S. is expected to release results of so-called "stress tests" next week to determine whether U.S. banks need more capitals to guard against a possible economic deterioration.

EURUSD extends to make a brief show above USD1.3300, touches USD1.3302. Underlying tone remains firm with rate currently trading around USD1.3298. Break and clear above USD1.3300 to allow for a move on toward USD1.3320.

Pound breaks back above USD1.4800 but momentum faltered ahead of overnight highs/offers at USD1.4820/25, easing back to USD1.4802 after touching USD1.4818. Above USD1.4825 and rate can push on toward USD1.4850/55. Above here and rate can move toward USD1.4890/00. Support moves up to USD1.4790.

EURJPY - Japanese margin accounts said to be sellers of yen crosses into this morning's rally, with euro-yen so far capped ahead of JPY132.00. Fibonacci resistance then noted at JPY132.44, with the 200-day moving average of more significance at JPY133.38 after the false break last month. Euro-yen trading below the 200-day on a closing basis since August 2008.

Before next week's data and policy decision, traders are watching the ISM Manufacturing Index, which could provide further evidence the U.S. economy is stabilizing.

Most important events of the day