Forex Market Review – Euro remains above $1.33

Important: This page is part of archived content and may be outdated.

Euro remains above the $1.33 level for the third day, mainly driven by dollar weakness. EURUSD rose to a European session high of 1.3372 after being lifted by French GDP fourth quarter data. Meanwhile weaker than expected U.S. durable goods orders data that came in late in the session pressured the euro briefly but remained above the key support of $1.33.

Euro is likely to remain up in the immediate term due to broad dollar weakness as market focus has shifted away from Europe as immediate euro zone risks have been removed and the U.S. economic outlook now dominates.  The euro has improved its performance recently due to the immediate tail risk being removed, meaning the Greek default, and ECB policy with the recent LTRO has also succeeded in keeping the single currency  supported in the immediate short-term. Meanwhile, speculation of a Fed quantitative easing policy after Bernanke’s recent comments has weakened the greenback.

Dollar extended losses against the yen after the disappointing data on U.S. durable goods orders. Data showed a lower-than-expected rise in new orders for U.S. manufactured goods in February. USDJPY fell 0.15 percent immediately after the data. The session low was 82.60. to The yen’s advance also got a boost from seasonal flows by Japanese exporters buying at the end of their financial year.   EURJPY also decline after the US data, though the session low was reached earlier at 110.15.

GBPUSD opened the European session at 1.5954 and declined to a low of 1.5880. Sterling began its fall after disappointing GDP data that showed the U.K. economy contracted more than previously estimated in the final quarter of last year. Sterling dropped to a two-week low versus the euro after EURGBP surged to 0.8394 versus the opening level of 0.8355.

The Australian dollar extended losses against the U.S. dollar as fears over Chinese growth continue to weigh on the commodity exporter. Gold, a major Australian export, has lost over $26 since Tuesday. AUDUSD fell to a European session low of 1.0380 having pared all gains made from the post Bernanke speech on Monday.