The European common currency stopped its rally for three consecutive weeks against the dollar after touching 6 1/2-month high earlier today, while it also retreated against other majors on renewed debt concerns.
Financial Times said the Irish budget deficit for 2010 will be higher than the latest estimates, while Nobel Prize-winning economist Joseph Stiglitz said European common currency future is under risk.
Pressure increase on the euro ahead of the Greek plans to outweigh sluggish revenue growth when the Greek Finance Minister announces the 2011 budget later on today.
However, the relative improvement in European fundamentals may help the euro to advance again, especially with the expected pumping of money by central banks, which aim to bolster recovery.
The dollar rebounded from eight-month low to a high of 78.43 from the day’s opening at 78.00, as depicted by the dollar index, which tracks the performance of the dollar versus a basket of major currencies.
The greenback managed to do an upside correction after being overbought, where it may change its direction after the release of US pending home sales for August which are expected to show decline to 3.5% from 5.2% and factory orders which are predicted to drop to -0.4% in August from 0.1%.
Worries in markets enhanced demand on refuges such as dollar and yen at the expense of risky assets such as stocks where European shares failed to follow the suit of its Asian peers as it dropped during early trading.
Concerning the euro-dollar pair, it plunged on the daily charts as the pair is currently trading at 1.3685 after touching a high of 1.3805 and a low of 1.3664, whereas the trading range for today is among the key support at 1.3570 and the key resistance at 1.4000.
Moving to the sterling-dollar pair, it opened on a gap today then it touched a high of 1.5825 before it slipped to a low of 1.5747 after Osborne has said that delaying the cuts may affect UK top credit rating, while the it pared some of the losses as PMI construction unexpectedly rose to 53.8 in September from 52.1.
Meanwhile, the pair is trading at 1.5794, whereas the trading range for today is among the key support at 1.5620 and the key resistance at 1.6260.
With regard to the dollar-yen pair, it climbed to a high of 83.86 but slipped in an attempt to do an upside correction after being oversold, but the pair failed to continue as it retreated to 83.26.
BoJ policy makers in their two-day meeting are expected to increase the 30-trillion yen credit program for lenders to encourage bank lending.
The dollar may rebound as it seems that the BoJ will not tolerate another fall to 83 where they may intervene in market again as what happened on September 15.
The trading range for today is among the key support at 81.60 and the key resistance at 85.40.
Published on Mon, Oct 4 2010, 11:09 GMT
