Forex Market Review – Euro slides; pound declines after BOE minutes

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The euro’s advance against the dollar was soon capped in early European trading hours. EURUSD peaked at 1.3283 before easing down to 1.3211. EURJPY opened the session at 110.94 and extended gains to 111.42 before easing. The main driver behind the rise in the euro earlier today was the Greek parliament’s approval of the second bailout deal.

Sterling fell sharply against the dollar and euro after the release of the Bank of England minutes from the last policy meeting on March 8. The minutes were more dovish than expected and showed two MPC members wanted to expand the bank’s asset purchase program by 25 billion pounds.

Meanwhile, disclosure of February’s much higher-than-expected UK public sector borrowing figures also weighed on the pound. British Finance Minister George Osborne unveiled his 2012 budget today , suggesting that the British economy looked set to avoid a renewed recession and the recovery will pick up speed next year. GBPUSD fell to a session low of 1.5821 from an earlier high of 1.5922. EURGBP rose to an eight-day high of 0.8369 after the BOE minutes but soon slid back down to 0.8339 on a broadly declining euro .

The dollar rose against the yen and Swiss franc ahead of key U.S. economic data that is expected to show sales of previously owned U.S. homes probably rose in February to an almost two-year high, adding to signs of stabilization in the real-estate market. If the data come in strong, this will be dollar-positive.

USDJPY broke out of the 83.52/76 range it was trading in the last two session and rose to 84.08 in the European session.

Dollar also bounced against the Swiss franc, with USDCHF rising to a session high of 0.9125 from 0.9076.

The Australian dollar’s attempt to gain ground against the greenback ran out of steam. AUDUSD was capped at a European session high of 1.0523 before the broadly strengthening USD pressured the pair down to 1.0443.