Daily Forex Overview

Previous session overview

The euro edged lower against the dollar in Asia on Thursday as U.S. and European banks took profits after the euro hit a two-week high overnight.

Non-Japanese banks and speculators sold the risk-sensitive euro as falls in Japanese shares left them reluctant to take risks, traders said.

The U.S. unit was at JPY88.45, almost unchanged from its New York level of JPY88.43. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 80.064 from 79.971 in New York.

The EURUSD briefly dipped to USD1.3593 in European morning but rebounded sharply from there after Greece announced plans for a further USD6.5 billion in pay cuts and tax hikes to reduce its deficit, easing worries about the country's debt crisis. The euro rallied to USD1.3736 in NY afternoon.

The British pound strengthened after a survey showed an unexpected jump in UK services sector activity. Data from the purchasing managers' survey showed Britain's services sector rose to 58.4. Though the positive economic news pushed the pound higher, gains were limited as investors' wariness over Greece's debt problems made them shy away from risk.

The Australian dollar slid Thursday, struggling against some technical levels after key economic data boosted the currency earlier in the week. In a relatively quiet session, the Australian dollar drifted to the downside against most major currencies. The only domestic economic report was a reading on international trade that showed only a slight improvement.

Market expectation

The dollar-yen is recovering after posting a low at JPY88.14 it is currently trading at JPY88.33 after touching JPY88.37. Traders note they expect to see a sell the rally theme to the market today with offers initially at JPY88.50 and then JPY88.80.

Still, the euro may widen losses if any negative news about euro-zone fiscal problem emerges, adding to worries over the economic outlook, dealers said.

The near-term direction of the euro and the dollar will largely depend on Friday's U.S. non-farm payrolls report for February.

Some dealers said worse-than-expected figures may push the dollar toward JPY88.00 and the euro to JPY120.30 on mounting expectations the Federal Reserve won't likely hike its policy rate for the time being.

EURUSD traders reported stops through USD1.3640/35 targeted and triggered, taking rate down to USD1.3633. Rate currently trades back around USD1.3645 as profit take demand quickly emerges to soak up stop supply. Next support seen placed at USD1.3620.

European stocks are expected to open lower Thursday, taking their cue from a late selloff on Wall Street and a downbeat Asian session, as investors adopt a cautious stance ahead of key meetings at the Bank of England and European Central Bank.

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