Forex Asia Review – Euro consolidates gains after a frantic post-EU Summit rally

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EURUSD opened lower in Asia at 1.4190 after surging to 2-month high of 1.4246 in the US session on the EU debt deal news. Unable to break past resistance levels after being overbought, the pair consolidated between 1.4160-1.4200 after a strong rally yesterday that ran out of steam but remained supported under strong Asian markets.

 

GBPUSD opened in Asia at 1.6096 and mirrored EURUSD movements, also easing off seven-week highs. Technical readings came into play and an opportunity for profit taking ensued, bringing cable down to a low of 1.6083. EURGBP opened at 0.8811 and consolidated into a tight 0.8805-19 range as markets to a pause after a busy day yesterday.

 

USDJPY opened in Asia at 75.94 and dropped to 75.80 as the dollar was unable to hold onto gains from the US session. Despite warnings from finance Minister Azumi, markets dismissed the possibility of a Bank of Japan intervention in the markets. It would not be a feasible since the dollar is weak across the board, as the liquid safe haven dollar is sold off when risk appetite is high and investors turn to higher yielding risk currencies.

 

AUDUSD drifted lower in Asia after gaining 3.5 percent yesterday in reaction to the EU Summit news which spurred a relief rally across riskier assets. AUDUSD opened the Asian session at 1.0727 and edged down to 1.0654 following lower commodities. The aussie is a commodity-linked currency.

 

NZDUSD rose to a new six-week high early in Asian trading. Apart from the “euro-euphoria” the kiwi dollar strengthened after Reserve Bank of New Zealand Governor Alan Bollard hinted yesterday the possibility of future interest rate increases. Kiwi-dollar soon drifted lower from the 0.8241 high to fall to 0.8176 as profit taking took place and commodity-linked currencies moved lower in the Asian session.