Forex Market Review – EURGBP falls to one-month low

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EURUSD dipped slightly in the European trading session, unable to advance further from the highs of 1.3185 reached on Friday, when the euro surged after soft U.S. inflation data weakened the greenback. Lack of any significant economic data meant there was nothing to drive the pair higher, and EURUSD edged lower from the session open of 1.3166. However, a better-than-expected euro zone current account surplus helped support the pair, lifting it up from an early dip to 1.3140 to above 1.3153.

 

With a lack of data today, the market looked for direction from the Fed’s FOMC member William Dudley’s speech today. He is Federal Reserve Bank of New York President and an important FOMC voting member on interest rates. The market was focusing on whether he would  give any hints on further quantitative easing by the Fed, but he did not mention anything and gave mixed signals on the U.S. economic recovery.

 

The dollar was under pressure by the yen early in the session, with USDJPY sliding to 83.01 from 83.36 open level. Yen soon gave back gains and dollar turned back up to 83.47 yen, taking cue from the EURJPY pair which bounced from 109.79 to 109.16. Earlier in the day in Asian trading, euro hit a five-month high against yen, peaking at 110.14 yen.

 

GBPUSD broke out of the range it was trading during the Asian session and after opening in Europe at 1.584, shot up to 1.5889. This is the second day of gains for the pound versus the dollar since the U.S. inflation data on Friday. EURGBP fell to a one-month low of 0.8282 after sliding from an early session high of 0.8312. Markets will focus on the UK government budget meeting on Wednesday. British Chancellor of the Exchequer George Osborne will deliver the latest budget plan.

 

The Canadian dollar gained against its U.S. counterpart, helped by higher oil prices, which is Canada’s major export. USDCAD slid to 0.9906 from a European session high of 0.9929.Crude oil rose sharply in European trading to $107.91 on mixed signs about U.S. economic strength and also due to a cheaper dollar. Also, geopolitical tensions from Iran are keeping prices supported.