Morning Forex Overview

Previous session overview
On Tuesday, the dollar staged a strong rally as a top Federal Reserve official said interest rates may soon need to be lifted and oil prices dropped by about USD3 a barrel.

U.S. Treasury Secretary Henry Paulson repeated that a strong dollar is important for the nation's interests, which provided background support for the U.S. currency.

The Euro has weakened against the US dollar despite hawkish comments from ECB officials. Falling oil and concerns over the Euro economy also weighed. EURUSD traded with a low of 1.5758 and a high of 1.5945 before closing the day at 1.5781.

The British sterling held firm against the dollar and euro as investors wait the minutes to the Bank of England monetary policy meeting from earlier in the month. GBPUSD traded with a low of 1.9899 and a high of 2.0078 before closing the day at 1.9908.

Japanese economic data was surprisingly strong with convenience and supermarket store sales beating expectations. However Japanese yen weakened further against the dollar today. Investors continue to unload the low-risk currency as the dollar strengthens on stronger equities and lower oil costs.

The Canadian dollar fell against the dollar after retail sales data for May came in slightly weaker than expected.

The Australian dollar fell during Asian trading Wednesday after second quarter core inflation hit market expectations, damping any prospects for further rate hikes by the Reserve Bank of Australia.

Market expectation
USDCHF now is trying to edge resistance at 1.0308, but the outlook remains negative. Analysts saying that close below 1.0201 would increase downside pressure.

USDJPY rises as European short-term funds trigger stop-loss buying orders around 107.50. Many players buying back USD since sentiment recovering, stocks rising, oil prices falling. Pair last 107.57; may rise to 108.

AUDUSD is losing ground. Next key support for AUDUSD is 0.9660, then facing into 0.9500. Resistance is at 0.9740. Focus will be on U.S. data, Fed speech.

The minutes from the most recent Bank of England monetary policy meeting are due for release today and the big question for the British pound is whether or not the central bank has grown more dovish.