Forex Market Review – USDJPY hits new 11-month high again; euro gains against Swiss franc

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The dollar extended gains in the European trading session, continuing its advance especially against the yen, after the U.S. Federal Reserve policy meeting on Tuesday. The Fed failed to signal that it would undertake more stimulus measures, and gave a slightly optimistic tone about the health of the U.S. economy.

Investors were no longer hesitant to increase their long dollar positions on speculation that the Fed would not undertake more quantitative easing, which usually would weaken the currency. Also lifting dollar were better U.S. employment and retail sales data in recent weeks, giving more optimism on the outlook for the world’s biggest economy. Dollar was little changed after data showed the U.S. fourth quarter current account deficit widened.

USDJPY continues to break new eleven-month highs, hitting 83.63, the highest level since April 10, rising steadily since the Tuesday low of 81.95.

USDCHF consolidated gains close to 0.9277, climbing from yesterday’s low of 0.9139.

The ICE Dollar Index, which gauges the U.S. dollar against a basket of six major currencies, was higher at 80.27 from 80.11.

EURUSD continued its bearish trend once more, sliding to a low of 1.3030, which is acting as a key resistance level. Disappointing euro zone economic data also weighed on the single currency. Industrial production rose less than expected in January by 0.2 percent versus 0.8 forecast.

The euro however, rose to a one-month high against the Swiss franc, ahead of the Swiss National Bank monetary policy meeting on Thursday. Investors are being cautious in case the central bank raises the current 1.20 franc cap against the euro.  EURCHF rose to a high of 1.2115, breaking out of its 1.2055 range of about a week.  Earlier today, data showed the Swiss ZEW investor sentiment gained 21.2 points in March to balance at zero.

Gold prices suffered due to a stronger dollar. The tow assets usually have an inverse price relationship. Spot gold priced in USD fell to a European session low of $1,639.01, versus Tuesday’s European high of $1,701.20