Category Archives: Daily Forex Technical Reports

daily forex technical reports

Dukascopy Afternoon Forex Overview – Oct 15 2009

Previous session overview

The dollar is stronger against most major rivals in morning trading Thursday as go-go markets that pushed the Dow Jones Industrial Average past 10,000 and beat the greenback overnight to fresh 14-month lows now seem to be taking a breather.

Better-than-expected U.S. consumer price index data, along with an improvement in weekly jobless claims numbers, both released Thursday morning, failed to revive risk appetite that has sapped out of the currency market in early New York trading. Disappointment that Goldman Sachs’ results weren’t as strong as some had expected added to the reversal and supported the dollar.

The U.K. pound also is recovering strongly, as investors who had bet against sterling are now being squeezed as sterling hits key trading triggers put in place by short-term investors. The pound has suffered in recent sessions amid expectations that the Bank of England will be one of the laggard central banks in tightening monetary policy.

The Dollar Index, based on a trade-weighted basket of six currencies, is at 75.722, up from an overnight low at 75.211, a fresh 14 month low, and from 75.551 late Wednesday.

The European Central Bank is satisfied with the impact its unconventional policy measures have, even in the face of “subdued” lending developments, ECB President Jean-Claude Trichet said Thursday.

Trichet said part of what was happening was due to weaker demand for credit, while unconventional policy measures, which would include easy access to central bank funds for banks, helped to shore up lending.

Market expectation

Euro rally is pausing for breath, having almost reached resistance levels at USD1.4968/72, which was level that capped topside in November 2007 and latter the measured move of bull-flag break on Oct 6. Some pullback not ruled out, and initial support seen at USD1.4832/45 and 10-day support line at USD1.4778.

EURJPY technical traders are noting the pullback in the cross found a base in line with the Ichimoku Cloud top after the break above in the European morning. Subsequent 100-point bounce is bringing the 61.8% retrace of the August-October sell-off into play at JPY135.04. Key area to watch seen placed as the October highs just shy of JPY135.50.

USDJPY stalls ahead of tech resistance around JPY90.80 (61.8% Fib of JPY92.53/JPY88.02 move) – Japanese exporter interest noted around that level, traders say.

Canadian currency watchers believe that while a short-lived period of correction could ensue for the Canadian currency following two weeks of steady gains, its ultimate target remains the parity mark with the U.S. dollar, last achieved in July 2008.

Movers & Shakers:

GBP/JPY +2.75%
AUD/JPY +1.68%
GBP/USD +1.54%
GBP/CHF +1.49%
CHF/JPY +1.23%
USD/JPY +1.18%
EUR/JPY +1.04%
CAD/JPY +0.89%
USD/NOK +0.73%
EUR/NOK +0.57%
AUD/NZD -0.03%
USD/CHF -0.05%
EUR/USD -0.15%
EUR/CHF -0.20%
EUR/AUD -0.63%
EUR/GBP -1.66%

Important levels:

Support Resistance
EUR/USD
1.4866 1.4973
1.4799 1.5013
1.4759 1.5080
GBP/USD
1.5931 1.6054
1.5855 1.6101
1.5808 1.6177
USD/CHF
1.0106 1.0206
1.0068 1.0267
1.0007 1.0305
USD/JPY
88.863 89.933
88.316 90.456
87.793 91.003

Source: Dukascopy

Dukascopy Morning Forex Overview – Oct 15 2009

Previous session overview

The euro rose to a fresh 14-month high against the dollar in Asia on Thursday as hawkish comments by Reserve Bank of Australia Governor Glenn Stevens and strong Asian shares fueled appetite for riskier currencies.

Governor Stevens said early in the Asian morning that the Aussie dollar is being supported by the nation’s economic outperformance compared with its global peers. U.S. and European short-term investors took the comment as a cue to take risk and bought higher-yielding currencies, dealers said.

The euro climbed to a high of USD1.4967, its highest level since Aug. 13, 2008, compared with its level in late New York hours of around USD1.4910. The Dollar Index, which gauges the currency’s value against six majors including the euro, declined to 75.21, also a fresh 14-month low.

The Pound also took advantage of a weaker USD and further by positive readings in UK unemployment which was steady at 7.9%, however Jobless claims only rose by 20.8K, the smallest rise since May 2008.

The Australian dollar surged to fresh 14-month highs Thursday buoyed by signals from the Reserve Bank of Australia that interest rates will continue rising over coming months.

Market expectation

As risk appetite grows, the yen and dollar are taking losses against the euro and U.K. pound Thursday.

Strength in equities reflected by the break suggests the euro and risk-sensitive currencies, such as the Canadian and Australian dollars, can continue their appreciation against the greenback, analysts said.

European stocks are expected to open higher Thursday, supported by fresh confidence in the global economic recovery as the third quarter earnings season proceeds.

EURUSD found the impetus to move above Wednesday highs at USD1.4948 to take out suggested barriers at USD1.4950, the move peaking in Asia at USD1.4961. Further demand into early Europe has extended move to USD1.4967. Offers are reported in place from around USD1.4970, with further interest seen positioned ahead of option barriers at USD1.5000. Support at USD1.4920. GS and Citi Q3 earnings are in focus, along with EZ and US inflation data.

GBPUSD early Europe take rate up to USD1.6116 but offers placed ahead of USD1.6120 so far able to counter the early upside pressure. System stops, as reported in a recent bullet (0249EDT), placed on a break above. However, technical traders suggest that area between USD1.6125/35 should provide some resistance. Further offers noted toward USD1.6150 ahead of USD1.6180. Support seen placed at USD1.6080/70.

Traders said the euro could reach USD1.5000 and JPY134.00 later in the day if U.S. economic data and earnings reports slated for release later in the global day prove good, lifting U.S. stocks further.

Some traders expected markets to remain buoyant despite a slew of U.S. earnings reports and data on the slate for later Thursday.

Movers & Shakers:

AUD/JPY +1.38%
CHF/JPY +1.18%
CAD/JPY +1.13%
GBP/JPY +1.03%
EUR/JPY +1.01%
NZD/USD +0.93%
AUD/USD +0.88%
GBP/USD +0.52%
EUR/USD +0.51%
USD/JPY +0.49%
EUR/CAD -0.13%
GBP/CHF -0.17%
EUR/CHF -0.19%
EUR/AUD -0.36%
EUR/NOK -0.63%
USD/CAD -0.64%
USD/CHF -0.69%
USD/SEK -0.97%
USD/NOK -1.14%

Important levels:

Support Resistance
EUR/USD
1.4866 1.4973
1.4799 1.5013
1.4759 1.5080
GBP/USD
1.5931 1.6054
1.5855 1.6101
1.5808 1.6177
USD/CHF
1.0106 1.0206
1.0068 1.0267
1.0007 1.0305
USD/JPY
88.863 89.933
88.316 90.456
87.793 91.003

Source: Dukascopy

Dukascopy Afternoon Forex Overview – Oct 14 2009

Previous session overview

The dollar stayed near 14-month lows on Wednesday after U.S. retail sales topped estimates, adding to confidence stemming from better-than-expected earnings from major companies and good economic data overseas.

The dollar is lower but above its weakest levels of the day against most widely-traded currencies early Wednesday, as global risk appetites have been further strengthened by positive corporate earnings reports and economic data.

Recent upside earnings surprises from the likes of Intel Corp. (INTC) and J.P. Morgan Chase (JPM) gave a significant boost to global risk sentiment overnight, leading to extensions of rallies for many equity markets as well as further advances for commodities like oil and gold.

The positive mood was helped by news from China that its exports hadn’t declined as much as the market had anticipated. Instead of falling 21% in the year to September, they were down by only 15.2%, a big improvement on the 23.4% fall registered in August.

The Shanghai Composite Index reflected this with a 1.2% rally on the day.

U.S. data was also guardedly positive, as September retail sales declined less than feared with a 1.5% monthly contraction, assisted by generally upbeat results outside of the auto sector.

All this has served to accentuate pressure on the dollar, as global capital idled during previous months of financial crisis continues to flow toward higher-yielding and riskier assets.

The euro traded at USD1.4884 versus the dollar, up from USD1.4851 late Tuesday. Earlier, the euro pressed above USD1.49 for the first time in more than a year.

Market expectation

EURUSD with stocks set to open in solid positive territory; risk appetite is picking up – euro presses back over USD1.4900, with eyes on a retest of the o/n highs near USD1.4020. Mix of offers in the USD1.4905/20. Barrier said to be in place at USD1.4950, with offers ahead and stops over USD1.4955/60.

EURJPY pullback from US highs at JPY133.75 extending under JPY133.40, with traders seeing light bids now in the JPY133.20/15 area, more into JPY133.00. Topside remains in focus after the break back into the Ichimoku Cloud this week, the top of which is seen as key resistance at JPY133.95.

USDJPY dragged lower by a combination of overall dollar weakness as well as light talk of central bank selling. Traders remind that with Asian central banks intervening regularly to prevent their currencies from rising too quickly vs the dollar, these CBS in many cases are choosing to then leg the position by selling USDJPY. This allows them to increase their yen reserves (larger trading partner) while they also increase their overall reserves. Traders also note frustration that USDJPY could not vault JPY90 and stalled at JPY89.90 earlier.

Traders said, the weakness in the Greenback continues to press into tech support and new oversold territory. A correction is sorely needed and could happen at any time; with US data due today and into the end of the week there is potential for data to be seen as negative for equities. Should equities and commodities pullback the shorts could run for the exits en masse creating a sharp rally in the USD. Traders said if the bears decide to take a break and cover it will be a drop in Gold that is the precipitating event.

Movers & Shakers:

GBP/JPY +1.27%
GBP/USD +1.25%
GBP/CHF +0.92%
AUD/JPY +0.52%
AUD/USD +0.51%
CHF/JPY +0.35%
EUR/JPY +0.33%
CAD/JPY +0.33%
EUR/USD +0.32%
AUD/NZD +0.28%
EUR/CHF -0.01%
EUR/AUD -0.19%
USD/CAD -0.30%
USD/CHF -0.33%
USD/SEK -0.49%
EUR/NOK -0.62%
USD/NOK -0.92%
EUR/GBP -0.93%

Important levels:

Support Resistance
EUR/USD
1.4783 1.4896
1.4716 1.4943
1.4669 1.5010
GBP/USD
1.5781 1.6012
1.5630 1.6091
1.5551 1.6242
USD/CHF
1.0184 1.0268
1.0147 1.0316
1.0099 1.0353
USD/JPY
89.460 90.220
89.070 90.590
88.700 90.980

Source: Dukascopy

Dukascopy Morning Forex Overview – Oct 14 2009

Previous session overview

The euro rose to a 14-month high against the dollar in Asia Wednesday amid the broad greenback weakness due to growing expectations the Federal Reserve will keep interest rates low for at least the next year.

The yen also rose against the U.S. unit and the two currencies could rise even further later in the day because of a dearth of dollar-supportive factors, dealers said.

U.S. Federal Reserve Vice Chairman Donald Kohn said overnight in a speech in St. Louis that he expects “the persistence of economic slack, accompanied by stable longer-term inflation expectations, will keep inflation subdued for some time.”

The dovish comments sent the yield on the benchmark 10-year Treasury down to 3.32%. The lower interest rates, coupled with the latest sign that they are likely to stay depressed well into next year, prompted players in Asia to offload dollars, dealers said.

That caused the greenback to weaken broadly against its rivals, particularly against currencies offering higher yields such as the euro and Australian dollar, dealers said.

The Pound was stronger initially on improving UK RICS Housing (at 22, two year high) and Retail Sales figures (2.8% for September), although upside momentum was limited following speculation that UK inflation had been at its lowest level in 5 years.

The Australian dollar forged its way to a fresh 14-month high late in the Asian session Wednesday as renewed greenback weakness and surprising resilience in regional equities markets bolstered risk appetite. At 0500 GMT, the Australian dollar was trading at USD0.9135 up from USD0.9076 late Tuesday and just off its intraday high of USD0.9144, its highest reading since Aug. 6, 2008. Against the Japanese yen, it was trading at JPY81.27, down from JPY81.645.

Market expectation

The euro is higher and seems likely to hold recent gains, even after Tuesday’s disappointing euro-zone economic data.

EURUSD Asian traders note that the USD1.4900 is suggested to hold barrier interest, adding that a major Japanese name has been a noted seller ahead of this level through the overnight session. Rate has been able to extend gains into early European trade but falters at USD1.4899. Rate currently trades back around USD1.4885.

The U.K. pound rebounded during U.S. trading Tuesday, though analysts said sterling still remains under near-term pressure.

Dealers said that unless upcoming U.S. economic data and corporate earnings reports log surprisingly strong results and because U.S. share markets to rally, pushing up long-term U.S. interest rates, the dollar will likely continue weakening for the rest of the weak.

U.S. September retail and food sales are due later at 1230 GMT. Economists expect sales to fall 2.1% on-month, after climbing 2.7% in August. Players will also be watching the third quarter earnings report from J.P. Morgan Chase.

Continued worries over U.K. fiscal policy, including its high deficits, and investor belief the BOE will continue to keep interest rates low, will encourage traders to forsake sterling for the higher-yielding currencies backed by better economic fundamentals, said analysts.

Movers & Shakers:

GBP/USD +1.19%
AUD/USD +0.76%
EUR/USD +0.66%
GBP/CHF +0.55%
NZD/USD +0.39%
AUD/NZD +0.37%
EUR/CAD +0.13%
GBP/JPY +0.13%
EUR/CHF +0.03%
AUD/JPY -0.28%
USD/SEK -0.28%
EUR/JPY -0.38%
CHF/JPY -0.39%
CAD/JPY -0.51%
EUR/GBP -0.51%
USD/CAD -0.52%
USD/CHF -0.63%
USD/NOK -0.82%
USD/JPY -1.03%

Important levels:

Support Resistance
EUR/USD
1.4783 1.4896
1.4716 1.4943
1.4669 1.5010
GBP/USD
1.5781 1.6012
1.5630 1.6091
1.5551 1.6242
USD/CHF
1.0184 1.0268
1.0147 1.0316
1.0099 1.0353
USD/JPY
89.460 90.220
89.070 90.590
88.700 90.980

Source: Dukascopy

Dukascopy Afternoon Forex Overview – Oct 13 2009

Previous session overview

The euro hit its highest levels against the dollar since September 2008 in early New York trading Tuesday, as investors chase higher yields despite some discouraging economic reports from the euro zone.

Worse-than-expected overnight euro-zone data failed to halt the common currency’s march toward USD1.50, a level that is a target for traders.

The allure of higher returns in the euro, the Australian dollar and other better-yielding currencies, fuelled by positive third-quarter corporate earnings, led investors to shake off the disappointing German data, said Stuart Bennett, senior currency strategist at Calyon in London.

The ZEW economic expectations index for Germany fell to 56 from 57.7 in September; economists had forecast the expectations index to be unchanged. The current German economic conditions index remained “very poor,” the ZEW institute said, with a modest increase of 1.8 points to a level of -72.2, a reading not as good as economists expected.

Germany Reports from some of the euro zone’s biggest economies Tuesday underscored warnings that the region’s economic recovery could be dogged by setbacks.

The euro hit USD1.4876 in early New York trading, a level not seen since September last year. It has since given back some of those gains, but remains sharply higher on the day.

Market expectation

Pound recovery off pullback lows around USD1.5785 (38.2% USD1.5708/1.5829) seen extending to USD1.5815, the rate in late European morning trade able to move above earlier Asian highs at USD1.5825 to USD1.5829. Offers now seen placed to USD1.5820, with interest extending now to USD1.5830, a break to expose stronger area between USD1.5845/50. Support remains back at USD1.5785/80.

EURJPY attempting to regain a foothold above JPY133.00, though as yet the move comes with a lack of momentum as the European high remains untested at JPY133.25. Offers still noted into JPY133.30 with technical analysts then seeing trend line resistance from the August highs at JPY133.65. The 76.4% retrace of the September-October sell-off comes in at JPY133.95, followed closely by the top of the Ichimoku Cloud at JPY134.00. A close above the Cloud base (JPY132.86) still needed to take the focus away from the downside.

Traders are noting that Loonie has de-coupled from recent commodity driven price action and is moving more from an assumption that the BOC will move quickly to raise rates. Traders think that, the relentless USD selling is putting the USD into record oversold territory as sentiment and technical’s now push into areas almost never seen in any market; the Greenback is reaching a euphoria/frenzy for sellers. Most traders are bearish but are shaking their heads wondering where the correction is. Should Gold, Oil or Stocks have a correction it will likely take the USD the other way as late sellers will cover; look for caution to be the rule this week and more two-way action is likely.

Movers & Shakers:

EUR/GBP +0.70%
EUR/USD +0.51%
EUR/AUD +0.39%
NZD/USD +0.33%
EUR/CAD +0.25%
CHF/JPY +0.15%
EUR/JPY +0.14%
AUD/USD +0.12%
AUD/NZD -0.19%
EUR/NOK -0.19%
AUD/JPY -0.25%
USD/SEK -0.27%
USD/CAD -0.27%
USD/JPY -0.38%
USD/CHF -0.53%
GBP/JPY -0.55%
GBP/CHF -0.71%
USD/NOK -0.71%

Important levels:

Support Resistance
EUR/USD
1.4708 1.4845
1.4624 1.4898
1.4571 1.4982
GBP/USD
1.5734 1.5889
1.5653 1.5964
1.5578 1.6045
USD/CHF
1.0210 1.0330
1.0162 1.0401
1.0091 1.0449
USD/JPY
89.363 90.263
89.016 90.816
88.463 91.163

Source: Dukascopy

Dukascopy Morning Forex Overview – Oct 13 2009

Previous session overview

The dollar rose against the yen in Asia on Tuesday as Japanese importers bought a larger volume of greenbacks than usual to settle accounts after a three-day weekend.

But the trend remains negative for the dollar, which will likely soon resume falling, dealers said. Many short-term investors believe the U.S. Federal Reserve will be forced to keep its interest rate low for now due to the country’s slow economic recovery, despite recent hawkish comments by Fed Chairman Ben Bernanke.

At 0450 GMT, the dollar stood at JPY89.90 from JPY89.83 in New York on Monday. The Dollar Index, which measures the dollar’s value against the basket of major currencies, was at 76.17, unchanged from overnight in New York.

The euro was at USD1.4782 from USD1.4784 and JPY132.86 from JPY132.76.

On Monday EUR rallied from the Sydney close, reaching USD1.4813 where it has consolidated.

GBP was under pressure, dipping to USD1.5729, a post-May low, but has recovered to USD1.5820 for little change. PM Gordon Brown added to the view that monetary stimulus should remain in place for several years, given the dire fiscal position.

The Australian dollar was modestly stronger but off recent 14-month highs in late Asian trade Tuesday on the back of a broader improvement in risk-sensitive asset prices. Thin trading volumes with U.S. markets mostly closed for a public holiday Monday keeping price action fairly muted though a broad rally in regional equities helped keep the Australian unit in positive territory.

Market expectation

Major currency pairs are little changed so far Tuesday yet the euro has the favorable odds and the pound and dollar look vulnerable.

European stock markets are expected to open lower Tuesday, as investors pause for breath and wait for the release of some high-profile corporate earnings figures this week to provide fresh impetus.

For EURUSD offers said to remain in place between USD1.4800/20, a break to open a move back toward USD1.4845 (Sep23 high) with stronger offers noted from here and extending to USD1.4850. This latter level holds option barrier interest, part of which rolls off today. Bids remain in place to USD1.4760/55 with talk of stops positioned on a break below with further stops seen dotted down to USD1.4730.

Market participants will be watching the German ZEW economic sentiment indicator for October, due at 0900 GMT, as well as earnings reports from U.S. companies such as Intel Corp.

If the results of these data and earnings reports come in stronger than expected, risk tolerance will improve, leading to selling of the safe-haven U.S. unit, said analysts.

Later in the week, investors will be watching Wednesday’s release of U.S. retail sales and Thursday’s data on the U.S. consumer price index. The minutes from the most recent meeting of the Federal Reserve’s interest-rate-setting body, the Federal Open Market Committee, will be released Wednesday, and will be pored over by investors, analysts said.

Movers & Shakers:

NZD/USD +1.23%
EUR/GBP +0.87%
CAD/JPY +0.73%
AUD/USD +0.51%
EUR/USD +0.50%
EUR/NOK +0.29%
CHF/JPY +0.29%
AUD/JPY +0.20%
EUR/JPY +0.18%
USD/JPY -0.31%
GBP/USD -0.38%
EUR/CAD -0.55%
USD/CHF -0.61%
GBP/JPY -0.68%
AUD/NZD -0.72%
USD/SEK -0.95%
GBP/CHF -0.98%
USD/CAD -1.03%

Important levels:

Support Resistance
EUR/USD
1.4708 1.4845
1.4624 1.4898
1.4571 1.4982
GBP/USD
1.5734 1.5889
1.5653 1.5964
1.5578 1.6045
USD/CHF
1.0210 1.0330
1.0162 1.0401
1.0091 1.0449
USD/JPY
89.363 90.263
89.016 90.816
88.463 91.163

Source: Dukascopy

Dukascopy Afternoon Forex Overview – Oct 12 2009

Previous session overview

The dollar is likely to continue to sink next week amid growing appetite for non-U.S. assets and signs of apparent official resignation at the dollar’s decline.

Mounting faith in economic recovery has reduced the dollar’s safe-haven appeal, while global interest-rate dynamics have fostered the use of the dollar as a funding currency for riskier investments.

The lukewarm lip-service paid to the dollar’s decline in recent statements by some international monetary officials doesn’t pose much of an obstacle to the U.S. currency’s slide, either.

Moreover, if companies continue to report encouraging results in the slew of corporate earnings reports on tap next week, the euro and other higher-yielding currencies should gain ground on the dollar.

The dollar received a day of respite Friday, rising against the euro and yen as investors took profits and adjusted positions ahead of the long weekend due to holidays Monday in the U.S., Canada and Japan. However, the rally isn’t expected to last.

The Swiss National Bank must be sighing with relief as confidence in the global economic recovery rises and investors start selling low-yielding currencies, such as the Swiss franc, in favor of higher-yielders, such as the euro.

Market expectation

Against this background, analysts expect the euro to trade between USD1.47 and USD1.50 in the coming week, while the U.S. currency fluctuates between JPY87.50 and JPY91.0.

EURGBP pullback off earlier traded highs at stg0.9350 sees rate meeting demand interest around the broken resistance area at stg0.9325/20. Rate currently trades around stg0.9328. Move seen as cable extends its recovery off earlier lows at USD1.5728, moving up to USD1.5835 but holding just shy of earlier Asian highs at USD1.5843. Offers are noted between USD1.5845/50. Through here and earlier highs at USD1.5883 may move back into view.

USDJPY – pullback from earlier highs just shy of JPY90.50 now extending towards JPY90.00 where light bids are noted, in line with expiry interest for the NY cut today. A break below to expose retracements of the bounce from last week’s JPY88.01 lows to today’s high at JPY89.88, JPY89.52 and JPY89.23. Topside stops still noted at JPY90.50/70.

The prospect of U.S. rates remaining at ultra-low levels for a while longer yet is one important element, along with rising risk appetites, in the dollar’s increasing use as a funding currency, whereby investors borrow dollars on the cheap and use them to finance bets in riskier currencies and other assets.

These trends have in recent days brought the dollar to the brink of some significant levels against the euro, yen, and other currencies. Moving beyond these levels in the near term would likely add further impetus to the dollar’s downtrend, according to most currency watchers.

Movers & Shakers:

CAD/JPY +1.07%
CHF/JPY +0.61%
AUD/JPY +0.58%
EUR/JPY +0.48%
EUR/NOK +0.45%
AUD/NZD +0.38%
EUR/GBP +0.38%
AUD/USD +0.30%
USD/NOK +0.24%
USD/JPY +0.23%
EUR/AUD -0.07%
NZD/USD -0.08%
USD/SEK -0.11%
EUR/CHF -0.13%
GBP/USD -0.17%
USD/CHF -0.33%
GBP/CHF -0.48%
EUR/CAD -0.53%
USD/CAD -0.73%

Important levels:

Support Resistance
EUR/USD
1.4678 1.4784
1.4623 1.4835
1.4572 1.4890
GBP/USD
1.5763 1.5997
1.5678 1.6145
1.5530 1.6230
USD/CHF
1.0276 1.0356
1.0234 1.0395
1.0195 1.0437
USD/JPY
89.003 90.233
88.216 90.676
87.773 91.463

Source: Dukascopy

Dukascopy Morning Forex Overview – Oct 12 2009

Previous session overview

The dollar rose against the yen and the euro in Asia Monday, building on gains posted Friday after U.S. Federal Reserve Chairman Ben Bernanke said the Fed is ready to tighten monetary policy once a recovery takes hold in the world’s largest economy.

With Japan’s financial markets closed for a local holiday, the dollar also remained supported by a better-than-forecast report on the U.S. trade balance in August released Friday. But currency analysts say the greenback’s prospects remain poor, and it should move lower against main rivals in coming days.

The dollar is out of favor with currency traders because ultra-low interest rates in the U.S. – expected to remain in place for some time yet – have resulted in greater investor interest in other higher-yielding currencies.

At 0505 GMT, the dollar traded at JPY90.18, compared with JPY89.83 late Friday in New York.

The Euro edged lower following Bernanke comments and further weighed upon as a report showed German Exports had declined unexpectedly. This was also reflected in a narrowing of the German trade balance to 8.1 mln from previous 14.1 mln.

The British pound tumbled against the greenback on Friday after Bernanke’s hawkish remarks on dollar. In addition, market expectations that Britain will be the last amongst major countries to withdraw its extremely easy monetary policy due to its poor economic performance also put extra pressure on sterling.

The Australian dollar was weaker in late Asian trade Monday as the greenback rallied amid thin liquidity and on the back of continued speculation the U.S. Federal Reserve may be closer to tightening policy.  The U.S. dollar continued to strengthen against the major currencies on the back of a speech delivered by Fed Chairman Ben Bernanke last week highlighting a readiness to tighten policy when appropriate.

Market expectation

The euro, pound and dollar are higher against the yen Monday, but otherwise are trading in tight ranges. Many investors are sidelined with Japanese markets closed and as many U.S. traders were expected to be away for Columbus Day later.

Most currency watchers are reluctant to impart much lasting significance to the dollar’s rally on Friday’s accumulation of positive influences.

The dollar is generally seen as facing too many obstacles in the near term, including the unlikeness of any imminent turn to tighter policy by the Federal Reserve.

For EURUSD bid interest remains in place between USD1.4680/70, a break to open a deeper move toward USD1.4650. Further demand noted in place below USD1.4630. Tokyo holiday overnight and a Federal holiday in the US (stock markets open) expected to provide for subdued trading conditions.

Monday will be holiday in Japan and Canada.

Movers & Shakers:

USD/SEK +0.58%
AUD/NZD +0.53%
GBP/JPY +0.53%
USD/JPY +0.49%
CHF/JPY +0.46%
CAD/JPY +0.44%
EUR/JPY +0.43%
AUD/JPY +0.41%
GBP/CHF +0.13%
EUR/CHF -0.03%
EUR/USD -0.10%
AUD/USD -0.13%
EUR/GBP -0.16%
NZD/USD -0.64%

Important levels:

Support Resistance
EUR/USD
1.4678 1.4784
1.4623 1.4835
1.4572 1.4890
GBP/USD
1.5763 1.5997
1.5678 1.6145
1.5530 1.6230
USD/CHF
1.0276 1.0356
1.0234 1.0395
1.0195 1.0437
USD/JPY
89.003 90.233
88.216 90.676
87.773 91.463

Source: Dukascopy