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Overall, the dollar strengthened on Tuesday against every other major currency. Trade desks bought the dollar even though the S&P futures were not able to break below the 880.00, or pull any important moves. However, the greenback’s moves were sustained by the declines seen in the commodity markets, where crude oil posted declines for a second consecutive day. For now, the dollar index has reached the 80.70 level.
The Euro (Eur/Usd) is currently trading above TheLFB S3 (1.3890), after it lost 90 pips during the Asian and the European trading hours. Most of the declines came during the European session, even thought the S&P futures were not able to move significantly lower. The next important swing area for the euro will be the 1.3850 area.
The German economy contracted in the first quarter by 3.8%, as the preliminary read showed. The released number represents the biggest quarterly drop since records first begun, in 1970. Compared with Q1 2008 the German economy contracted by a whopping 6.9%. The Euro-area current account was released at -6.5B, better than analysts’ expectations. The previously released number, for the month of February, was revised lower, to -7.8B.
The Pound (Gbp/Usd) lost 140 pips during the overnight session, bouncing from a six months high. With tonight’s declines, the pound has almost pared gains made during the last three days. Additionally, the pound declined the most in the last month of trading overnight.
The Aussie (Aud/Usd) declined sharply during the Asian session, testing TheLFB S2 (0.7740), but the move was slowed due to the market’s light participation. However, the support area finally gave way during the European session, when the dollar was getting stronger against every other major currency. On the daily chart, the next major support area will be at the 0.7700 area.
The Cad (Usd/Cad) broke the downside channel of the last six days of trading during the overnight session. As such, the cad might head higher in the following sessions, retracing some of the recent declines. Tonight, the cad rose 75 pips and is trading just under TheLFB R2 (1.1315).
The Swissy (Usd/Chf) rose 80 pips during the Tuesday session, as the dollar strengthened across the board. Moreover, the swissy rose on Tuesday for the first time in the last seven days of trading. The SNB continues to complain about the swissy’s strength and further intervention in the currency market should not be discounted.
The Yen (Usd/Yen) spent most of the overnight session trying to break above the neutral pivot point (84.20). The pair managed to eventually pull the move during the European session, but only for a limited period. Until now, the yen has traded within the range of the previous day of trading, lacking the momentum to break higher.
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