Overall, the dollar continued to strengthened during the European session, on a light economic calendar. The dollar strength came as the currency market was in risk-aversion mode, as the low yielding currencies gained ground. The next test for the dollar will come during the U.S. session when two important releases, PPI and retail sales, will be released. Additionally, European markets are holding above the break-even line, something that might pull the U.S. futures higher and ultimately drag the greenback lower.
The Euro (EUR/USD) ran into resistance at the 20-day simple moving average during the early Asian session, and dropped 100 pips. The euro’s decline was inline with the selling experienced in the other major pairs, as the dollar posted strong gains tonight on risk-aversion.
The Pound (GBP/USD) traded flat during the Asian session, but had a feeble attempt to break higher as the session came to a close. Currently, the pound is trading, once again, near the opening price of the Tuesday session. The pound’s daily chart shows that the pair is trading very close to an important swing point, which will require strong momentum in order to break through.
The Aussie (AUD/USD) fell almost 80 pips during the overnight session, erasing a major part of the gains seen during the previous day of trading. Additionally, the aussie reached the highest valuation in the last half of year, yesterday, while moving very close to the 200-day simple moving average.
The National Australia Bank released the business confidence report this evening. Business confidence in Australia has improved to -13. The sentiment index gained 9 points from last month’s reading of -22. “Pessimists still outnumber optimists and have done for the past 14 releases, but interest rate cuts have the number of optimists rising meaning that consumer spending may benefit”, TheLFB-Forex.com Trade Team members said.
The Cad (USD/CAD) struggled during the overnight session to break above the 1.2240 area, the same place that acted as resistance during yesterday’s U.S. session. In the medium term, the sentiment surrounding the Canadian dollar seems to have turned bearish, as oil posts strong declines lately.
The Swissy (USD/CHF) gained 100 pips during the overnight session, retracing almost half of the declines seen on Monday. Most of the gains came during the late Asian and early European trading hours as the pair gathered momentum.
The Yen (Usd/Yen) dropped 70 pips during the Asian session, but hit support at the 99.40 level soon after the European open. The Japanese yen strengthened overnight as the currency market was driven by risk aversion once again.