Previous session overview
The U.S. dollar fell against the euro and the yen in Asia Tuesday, giving up recent gains as equity markets in much of the region rallied on improved risk sentiment.
With Japan’s markets still closed for a three-day holiday, South Korea’s equities led the charge, rising 1.4%, followed by a 0.7% gain in Singapore.
The Euro fell from the USD1.4700 handle but was very resilient as dip buyers and Crosses supported. EUR/JPY broke above JPY135 and EURGBP consolidated gains above 0.9050. The failure to test USD1.4600 saw buyers gain the upper hand supported by US stocks which finished only slightly lower on the day.
The Pound came under more pressure yesterday on the back of a publication from Bank of England indicating that the financial crisis might have lowered the long-term value of Sterling – see Interpreting recent movements in Sterling.
The Australian dollar closed higher on Tuesday, riding the coat tails of the New Zealand dollar, which leapt to a 13-month high on positive news from the country’s largest milk producer.
Market expectation
Analysts said the underlying tone on the dollar is negative due to the expectation that the U.S. Federal Reserve will keep rates at current ultra-low levels at least until late this year.
EURJPY is under pressure with dollar-yen into European dealing, triggering stops under JPY134.80 down to lows around JPY134.65. Attention now turns to the top of the Ichimoku Cloud at JPY134.50 as next support.
EURUSD major German analysts cited for providing the main buy interest that sees rate extend recovery to USD1.4732 in early Europe. Move passes through reported US name offers at USD1.4725/30, with stops through USD1.4740 so far remaining intact.
European stocks are seen opening mildly higher Tuesday, as investors enter at more attractive levels following the bout of profit-taking seen in the previous session.
The Australian dollar looks set to remain in its well established uptrend but headwinds could stiffen this week if the FOMC meeting produces any hint of hawkishness.
The U.S. Fed will start a two-day meeting later Tuesday and will release a widely anticipated policy statement Wednesday. On Thursday and Friday, leaders from the Group of 20 nations will meet in Pittsburgh, and any comments on the global economy or financial regulation will be watched closely.
Movers & Shakers:
| NZD/USD | +2.19% |
| AUD/USD | +1.09% |
| GBP/USD | +0.70% |
| EUR/USD | +0.50% |
| EUR/CAD | +0.30% |
| AUD/JPY | +0.29% |
| GBP/CHF | +0.22% |
| EUR/CHF | +0.01% |
| USD/CAD | -0.20% |
| CHF/JPY | -0.30% |
| EUR/JPY | -0.30% |
| USD/SEK | -0.47% |
| USD/CHF | -0.49% |
| EUR/AUD | -0.58% |
| USD/NOK | -0.59% |
| CAD/JPY | -0.59% |
| USD/JPY | -0.79% |
| AUD/NZD | -1.08% |
Important levels:
| EUR/USD | |
| 1.4625 | 1.4728 |
| 1.4567 | 1.4772 |
| 1.4523 | 1.4830 |
| GBP/USD | |
| 1.6144 | 1.6283 |
| 1.6070 | 1.6347 |
| 1.6006 | 1.6421 |
| USD/CHF | |
| 1.0279 | 1.0377 |
| 1.0237 | 1.0433 |
| 1.0181 | 1.0475 |
| USD/JPY | |
| 91.380 | 92.625 |
| 90.715 | 93.205 |
| 90.135 | 93.870 |
Source: Dukascopy
Great post!!! I’d say the process the USD has been having is pretty amazing. Closer is the day in which the USD will not rule the currency trading arena
You never know, perhaps the chips will fall as you say, perhaps not. But at this point I don’t think anyone has a viable replacement for the US dollar. China has suggested SDR (special drawing rights) be used as the new “global reserve currency,” but I’m not so sure this will happen. The problem is (in my opinion) that over 60% of all commodities and other financial instruments are priced in US dollar. Until that dynamic changes the US dollar will remain supreme as the world’s reserve currency.