Euro dipped slightly against the dollar during the Asian session after a strong rally in the prior U.S. session. Losses were limited as investors are focusing on the U.S. Federal Reserve policy meeting today. There is talk that further stimulus measures will be introduced in order to boost the U.S. economy. This would be positive for risk correlated currencies like euro and would weaken dollar. However, the single currency is still vulnerable to negative events in Europe. A Spanish bond auction today could spark volatility if yields rise.
EURUSD opened in Asia at 1.2684 after trading to as high as 1.2729 in New York trading on risk appetite triggered by Fed optimism. The pair drifted lower to 1.2661 on some profit-taking but consolidated around that level during the session.
GBPUSD remained near the four-week high of 1.5756 seen late Tuesday and traded a range of 1.5708 – 29 range in Asia. Focus turns to the Bank of England policy meeting minutes which will be released today from the late meeting. Sterling direction will depend on the tone of the report.
The yen briefly weakened, before erasing losses, after Japan posted a record trade deficit for May, with the gap growing larger than expected. USDJPY then proceeded to a low of 78.78 from the Asian session high of 79.11 as dollar weakness dominated most currency pairs ahead of the Fed meeting.
Aussie held onto gains made yesterday, with AUDUSD consolidating around the five-week high, trading between 1.0165 and 1.0190 in Asia.