Forex Market Review – Euro slips, yen bounces off 9-mth lows against dollar

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Euro dipped further against the dollar in European trading hours, retracing from a 2-1/2 month high of 1.3484 set on Friday as investors took the opportunity for profit-taking.  A G20 meeting in Mexico over the weekend failed to provide any new information that wasn’t known before. The G20 said in a statement that it supported adding funds, via the International Monetary Fund, to shore up the euro zone’s finances but added that Europe first must contribute more money.

The euro is expected to remain supported ahead of the European Central Bank’s LTRO on Wednesday, when the bank is expected to provide three more years of cheap long-term funding to banks. This is the second burst of liquidity by the ECB, the first being last December.

EURUSD opened in Europe at 1.3443 and slipped to a session low of 1.3383.

Sterling took direction from the EURUSD as risk appetite faded, and there was a lack of UK economic data. GBPUSD fell from 1.5860 to 1.5832.

The Japanese yen recovered from a nine-month low against the dollar on profit-taking as the dollar-yen was quite overbought so it was due for a pullback. USDJPY hit its highest level since May 31 in early Asian trading today at 81.65 and dipped to 80.30. Euro slipped from 109.20 to 107.74.

The ICE Dollar Index, which tracks the US dollar against a trade-weighted basket of currencies, rose to 78.595, compared with 78.398 late Friday in New York.

Crude oil prices eased off nine-month highs, dipping to $108.24 in European trading.