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Daily Forex Overview

By:

Dukascopy

2008-27-03

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Previous session overview
The euro is retracing slightly lower Thursday against the dollar and yen, but has strong support at $1.5750. A report released Wednesday by the German Ifo Institute showed business confidence in Germany, the euro-zone's largest economy, remains unhampered by U.S. blues.

US durables goods orders declined by 1.7% in February.

US new home sales continue to trend lower, falling 1.8% in February. However, the declines in December and January were scaled back a little, such that January sales were 2.2% higher than previously reported.

EURUSD traded with a low of 1.5587 and a high of 1.5833 before closing the day at 1.5832 in the New York session.

ECB chief Trichet noted concern about the euro's rise, but otherwise indicated that inflation is still the number one priority, and even went as far as urging people to be more confident about the economic outlook.

The British pound has extended its gains against the US dollar but it continues to underperform the Euro. The market now believes that the Bank of England is on track to cut interest rates next month. GBPUSD traded with a low of 1.9928 and a high of 2.0111 before closing the day at 2.0074 in the New York session.

The Japanese yen got a boost against the greenback along with most Asian currencies as risk appetite remained healthy and a recovery in gold and oil weighed on the US dollar. USDJPY traded with a low of 98.90 and a high of 100.32 before closing the day at 99.32 in the New York session.

The Canadian dollar rose to its highest level in a week versus the greenback due to higher commodity prices and fragile US data.

The Australian dollar climbed to a weekly high Thursday, buoyed by a slumping U.S. dollar, as another round of sluggish U.S. economic data and a clear signal from the European Central Bank that it won't be cutting rates soon drove the greenback lower.

Market expectation
Euro/USD - There is some profit taking and position adjustment going on, but the general uptrend will probably continue. The next stop for the euro is $1.60.

Gfk Consumer Confidence for the month of April is scheduled for release on Thursday.

Another view of the recent EUR strength could be that as a liquid and stable economic force, the European Union has become a safe haven from the housing and credit crisis.

With US officials having already done a lot of ???housekeeping' in recent weeks, traders are starting to cast their eyes towards other parts of the world that may be vulnerable - in particular, those countries with persistent current account deficits, as offshore funding becomes harder to secure.

Looking forward, today is US fourth quarter GDP which shouldn't be a surprise since it is the final revision. Later in Asia we are expecting Japanese Consumer Price Inflation, Retail Sales, and employment data.

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