Overall, the Asian session started off strongly with the major pairs moving considerably more than on an average day. These moves seem to be driven by risk-aversion as the equity markets retrace the gains seen during the last few weeks of trading. During the Tuesday trading session, the dollar index posted some significant gains even though the release calendar was almost empty during the second half of the day.
The Euro (Eur/Usd) fell 130 pips on Tuesday breaking under the 20-day moving average. The euro sell-off came as the dollar was strengthening against the majors, helped by risk-aversion. In the Asian session, the euro fell 80 pips extending the decline seen on Tuesday.
The Pound (Gbp/Usd) closed the last day of trading, Tuesday, forming a so-called dragonfly doji pattern, which usually denotes the market’s indecision points. The pound fell as much as 160 pips during the overnight session, but retraced as it reached the 100-day moving average. In the Asian session, the pound dropped 50 pips, down to the neutral pivot point (1.4695).
The Aussie (Aud/Usd) traded between two well-delimited support and resistance areas on Tuesday. On the upside, the aussie was stopped by the 0.7160 resistance area, while on the downside the pair found support at TheLFB S1 (0.7065) and at the same time reached the low on Monday. During tonight’s Asian session, the aussie fell 50 pips, re-testing the support area.
Home loans in Australia came in at 0.2 percent which was well below the analysts forecast. In seasonally adjusted terms, dwelling finance commitments increased 2.5 percent while owner occupied housing and investment housing came in at 2.8 percent and -1.5 percent respectively.
The Cad (Usd/Cad) was the only major pair that advanced against the dollar on Tuesday with small gains. The cad advanced 100 pips in the overnight session, but bounced off the resistance area formed by the 20 and the 50-day simple moving averages that helped the Canadian Dollar strengthen against the dollar.
The Swissy (Usd/Chf) traded in a small range during the early part of the overnight session on Tuesday, but surged during the European trading hours. During the U.S. session, the pair retraced and gave back some of the gains made earlier. The Asian open saw the pair surge 60 pips higher.
The Yen (Usd/Yen) declined on Tuesday for the first time in the last four days of trading. The pair closed the day 50 pips lower, but during the intra-day session, it fell as much as 120 pips. During the Asian session, the yen was very volatile, but still within Tuesday’s range.