Forex Asia Review – Euro remains strong in Asia, due for correction

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EURUSD opened in Asia at 1.3644. After a strong rally on Monday and marking the biggest gains in over a year, the euro held onto most gains in Asian trading but was due for a correction and profit-taking, consequently bringing down EURUSD to 1.3616. The pair remained buoyed as risk appetite was still on after German Chancellor Angela Merkel and French President Nicolas Sarkozy pledged on Sunday to deliver a plan to recapitalize European banks and address the Greek debt crisis by the next G20 summit in November. The focus turns to later today, when Slovakia votes on ratifying changes to the EFSF bailout fund, being the last country to vote. Until now, all EU countries have voted in favour of expanding the fund.


GBPUSD opened in Asia at 1.5665 and drifted lower alongside EURUSD to 1.5612 before steadying.Cable was also due for a correction after a rally yesterday lifted it by over 160 pips in reaction to the Merkel/Sarkozy euro zone plan. EUR/GBP opened at 0.8706 and edged up to 0.8727 towards the 0.8730 high seen in the previous US session.


AUDUSD opened in Asia at 0.9988 after rallying over 2 percent yesterday on risk appetite and gains in commodities as well as broad US dollar weakness. It see-sawed during the session but remained supported above 0.9949.


USDJPY traded an extremely tight range in the US session, but remained above 76.60. Euro steadied against the yen after rallying yesterday to104.98, its highest level since September 21, lifted by positive news that Europe is finally tackling the debt crisis, based on a Sarkozy and Merkel plan to recapitalize the banks and contain the sovereign debt crisis.