Dollar gains against the Euro after Obama's remarks on the U.S economy

The dollar gained momentum against the euro after President Barack Obama said the U.S. currency is “extraordinarily strong” because investors are confident in the economy. The yen rose for a second day versus the European currency on speculation Japanese companies are bringing back earnings on overseas assets before the financial year ends next week. “The confidence about the U.S. economy and the dollar is gradually recovering,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second- largest lender. “Thanks to aggressive policy steps there is an emerging view that the U.S. economy, which had slipped into a recession first has a better chance of pulling out of the doldrums ahead of other countries.” The EUR/USD is currently trading at $1.3430 as of 8:40am, GMT.

Sterling rallied broadly on Tuesday as inflation unexpectedly rose in February while Bank of England Governor Mervyn King said the amount of the central bank's gilt-buying operation may be reduced if its quantitative easing programme is a success. Data on Tuesday showed British consumer price inflation was 3.2 percent year-on-year in February, confounding expectations that it would ease to 2.6 percent. King said that this was a temporary move due to sterling's weakness. But markets reacted violently, with sterling jumping to a six-week high against the dollar and UK government bond futures tumbling sharply. The GBP/USD is currently trading at $1.4630 as of 8:45am, GMT.

The euro may extend its decline against the British pound to a six-week low of 86.40 pence after last week’s failure to breach so-called resistance at 95.30 pence, Standard Chartered Bank said, citing trading patterns. Resistance at 95.30 pence represents a 76.4 percent retracement of the euro’s decline from a Dec. 30 high of 98.03 pence to a Feb. 10 low of 86.40 pence, wrote David Mann, senior foreign-exchange strategist at Standard Chartered, referring to a number that is part of the Fibonacci sequence. Resistance refers to a level where sell orders may be clustered. “Euro-sterling stalled ahead of 95.30 resistance, leaving a top forming,” Hong Kong-based Mann said. “A move to test the 89 rising trend line support is expected, then to 86.40.” The EUR/GBP is currently trading at 0.9225 as of 9:10am, GMT.

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