The Japanese yen advanced against major currencies after Prime Minister Naoto Kan won party leadership vote today which lowered the chances that the government would intervene to weaken the currency that is currently hovering above 15-motnh high against the dollar.
The dollar index, which tracks the dollar movements versus six major currencies, pared its earlier drop when it hit a low of 81.65 where it found support that pushed it up to 81.94 ahead of the release of US retail sales which is expected to show improvement in August.
Since the release of the European Commission new growth forecasts yesterday which raised projections for the current year by almost double to 1.7% from the prior 0.9%, markets gained some optimism driving shares higher on hopes European economies will lead global recovery.
However, after the release of the European news today the euro snapped its earlier advance against the dollar. The downbeat reports from Europe gave an impetus to refuges such as yen and franc.
Today, German investor confidence fell for the second month to 19-month low which raised concerns of having a sluggish growth in the second half of the year in Europe's largest economy. Also the same survey for the euro zone dropped in addition to euro area industrial production fall.
Concerning the euro-dollar pair, it is showing decline on the daily and 4-hour charts after the grim German report which took the pair from a high of 1.2909 to 1.2846 where it is currently trading.
Despite the progress witnessed recently by euro-area economies, they are expected to face a slowdown in the second half of the year, according to the Commission's forecasts, as governments lower spending to trim deficit in addition to curing fiscal imbalances.
The trading range for today is among the key support at 1.2600 and the key resistance at 1.3135.
Turning to the sterling-dollar pair, it is showing slight drop on the daily charts after doing correction to the earlier drop when it hit a low of 1.5345 after house prices gauge slipped below economist's expectations in August.
In addition, CPI for August released today came lower than forecasts which meant that inflation remained above the BoE's upper limit, thereby raising concerns that the rate would remain above the 2% target.
Meanwhile, the royal pair is trading at 1.5400 after recording a high of 1.5441 while the trading range for today is among the key support at 1.5300 and the key resistance at 1.5620.
With regard to the dollar-yen pair, it is continuing its downside trend that started since May amid the absence of any intervention from the BoJ and the opaque outlook for the United States.
Now, the pair is trading at 83.30 after recording a high of 83.75and a low of 83.05, while the trading range for today is among the key support at 81.60 and the key resistance at 85.00.