Daily Forex Overview

Previous session overview

The dollar fell against the yen in Asia Wednesday as a widely expected decision by the Bank of Japan to further ease monetary policy prompted Asian speculators to lock in profits by selling the greenback.

But the U.S. currency recovered most of its losses as investors shifted their focus to other dollar-supportive factors such as firm Tokyo shares, and dealers said the greenback is likely to keep rising later in the global day.

In its policy board meeting, the BOJ decided that it will offer another JPY10 trillion in three-month cash at a 0.1% fixed rate to financial institutions, on top of the JPY10 trillion it offered in December.

The dollar recouped most of its losses, climbing to JPY90.39 as of 0450 GMT. Meanwhile, the euro changed hands at JPY124.59, up from JPY124.31 in New York Tuesday.

The Euro was already well supported before the FOMC announcement with the S&P affirming its current rating on the back of EU Financial Ministers general agreement to support Greece. German ZEW fell to 44.5 vs. 43.7 forecast in March and this helped underpin the move above USD1.3700.

The British pound recouped early losses aided by robust housing data and opinion polls. Stronger than expected housing data from DLCS showed prices rose 6.2% year-on-year in January.

The Australian dollar rose in Asia trade Wednesday, after Standard & Poor's affirmed its rating on Greece's debt and the World Bank's decision to raise its growth outlook for Australia's largest trading partner, China.

Market expectation

Dealers said the dollar may continue to rise against the safe-haven yen if European and U.S. share markets follow Tokyo higher.

Market participants are also focused on upcoming U.S. economic data, dealers said, including Thursday's U.S. consumer price index for February. Economists expect the index to rise 0.1% compared with a 0.2% gain in January. Any better than expected figures could push the dollar to JPY91.00 in the coming days, and the euro to JPY125.50, traders said.

For EURUSD offers seen placed to USD1.3810, a break to expose next resistance at USD1.3825 with stronger interest noted between USD1.3840/50. Talk of another barrier in place at USD1.3850 with stops above. A large USD1.3900 strike expiry for Thursday also noted and could help to draw rate higher. Support seen placed at USD1.3760/50.

Pound drops back to USD1.5225/20 area as talk of LHS fix interest does the rounds. Stronger support seen placed at USD1.5210/00, a break below to open a deeper move toward USD1.5180/70.

EURJPY having taken out reported stops above JPY125.00 the euro-yen slumps back to JPY124.80 area as some profit taking from Asian accounts impacts on the cross. Euro-yen currently trades JPY124.82.

Most important events of the day