Forex Market Review – Euro remains above $1.34 ahead of LTRO

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The euro remained steady against the dollar, trading the European session above $1.34 and close to last week’s  twelve-week high. Tomorrow’s European Central Bank LTRO provided risk appetite, as well as positive economic data showing improving euro zone economic sentiment at 94.4 versus a previous 93.4. Also  German consumer morale hit a one year high of 6.0. Meanwhile a well-received Italian bond sale also supported the euro.

Investors are mainly focused on tomorrow’s LTRO. This is the second scheduled three-year long-term refinancing operation by the European Central Bank,and follows December’s 500 billion euros that was offered to European banks with the purpose of averting a credit crunch.

EURUSD opened in Europe at 1.3440 and was mostly range-bound between 1.3419 and 1.3461.

U.S. data on core durable goods orders were slightly disappointing and made euro briefly trim some gains against the dollar at the end of the European session but soon recovered to previous levels.

New orders for U.S. manufactured goods fell in January by the most in three years as demand fell across the board from machinery to aircraft.

USDJPY was more affected by the U.S. data, falling to 80.33 from 80.59 prior to the data. Earlier the pair hit a session high of 80.77.

EURJPY edged up to a high of 108.72, up from the earlier Asian session low of 107.28. The pair dipped after the U.S. data to 108.01.

Among other major currencies, the British pound rose  against the dollar, with GBPUSD peaking at 1.5874, up from the prior session low of 1.5812. EURGBP was flat, meeting strong resistance at 0.8483.

Crude oil prices drifted lower from a session high of $108.61 to $107.61, pressured lower after the weak US data.