Massive pessimism wave swiped across financial markets yesterday while today the same situation in reverse dominated the scene as investors took advantage to low prices to benefit from yesterday's severe losses.
Starting with the dollar, which continues on depreciating against majors on the US dollar index, which tracks the performance of the currency against six-majors, where it fell on the daily basis to 75.971, compared with the opening levels of 76.415.
The Fed's action of preserving rates forced the dollar to continue on depreciation, marking the worst performing major for the past six-months, with further decline expected as Japan's nuclear crisis and MENA unrest intensifies.
Conditions in the US continue on improving, with Fed officials hinted that further expansion to stimulus are not likely to happen as the economy recovers in a suitable pace.
Conditions in Europe took a twist to the worse, with debt crisis haunting markets back where Moody's Investors Services downgraded Greece, Spain and Portugal's rating, while EU leaders failed to agree on a proper method to boost the EFSF to €440.0 billion from the current €250.0 billion.
Spain attempted to test investor's confidence today as it sold €4.1 billion worth of bonds at auction, while demand for securities increased as cost fell.
Spain managed to sell 10-year bonds at average yield of 5.162%, while sold €911 million of 30-year old bond at 5.875%.
The euro skyrocketed after the bond sales, where it fell yesterday to close at $1.3926, while today it rose from the opening levels of 1.3997 to trade at 1.4017 while setting a high of 1.4000 and a low of 1.3864.
Trading is bounded by the support at $1.3890 and the resistance at $1.4060. G-7 summit will be held tomorrow to discuss financial conditions in Europe in regards of debt, along with Japan's catastrophe with its nuclear crisis and the recent appreciation of the yen to an all time record high.
As for the pound, it rose on the daily scale, ahead of BoE's Minutes report to be released next week, where analysts will have a clearer picture on what to expect in regards of inflation in UK from BoE members.
The pound slashed almost all the losses acquired over the past two days, and rebounded from the support at $1.5966 to currently trade at 1.6128, while setting a high of 1.6212 and a low of 1.6037.
The pair's trading is bounded by the support at 1.5966 and the resistance at 1.6215.
The Swiss Franc strengthened for the fifth consecutive day as SNB hold its three-month labor rate at 0.25% in order to tackle elevated Franc levels, where investors continue on seeking the Franc as a haven. In addition, the Franc rose against the dollar as Japan's struggle to contain the nuclear crisis.
Inflation forecast by SNB was set at 0.8% for 2011 and 1.1% in 2012. In addition, growth is forecast to reach 2.0 percent from the previous expected 1.5 percent.
The dollar is currently trading at 0.9018 against the Franc, compared with the opening levels of 0.8986 while setting a high of 0.9057 and a low of 0.8957.
Turning to the far east, Japan's struggle to contain and end the nuclear crisis pushed the yen to a post WWII level, while BoJ's emergency liquidity that was injected into financial markets worth of five-trillion yen failed to sustain the rise of the currency and caused stocks to drop severely yesterday.
The yen surged almost 4.5 percent in less than half-an-hour in trading yesterday as the US session ended and Asian session started, on concern that Japan's intervention to limit the currency's appreciation will be delayed.
The Yen soared higher as Japan's Finance Minsiter Yoshihiko Noda said that G-7 will meet tomorrow to discuss the aftermath of last week's 8.9 magnitude earthquake that struck Japan, triggering a 10-meter high tsunami wave and leaving devastating damages to infrastructure in the country.
G-7 meeting will start 7 AM Tokyo time, where Noda said that Japan will brief officials on the damage to the economy while declining to comment on any possible interventions.
BoJ injected six-trillion to the financial system in a one-day operation today, pushing the total injected money into the economy this week to almost 35 trillion yen.
The yen reached a high of 76.31 against the dollar in trading yesterday, while trimming some of the advance as the dollar gained today to currently trade at 78.63, compared with the opening levels of 80.76, while setting a high of 81.17 and a low of 76.31.
The pair's in attempt to return to trading above 80.0 levels, but first it needs to breach a resistance at 79.75 before heading to test 80.0 levels and sustain a daily closing above this pivot level to compensate for the losses acquired yesterday.
Trading range for today for the yen will be bounded by the support at 75.60 and the resistance at 80.20.
Volatility will influence the yen's trading by the approach of Asian session.