Overall, the majors moved higher during the Asian session, but that came to an end shortly after the London open. As the European markets opened, most of the pairs were testing the swing points of the last few days of trading, but the majors retraced the moves made earlier. During the U.S. session, the currency market is likely to be influenced by equity markets and by the news items referring to the toxic asset plan.

The Euro (Eur/Usd) advanced up to the 1.3730 area, but the pair was not able to push any higher, similar to the previous days of trading. From that point, the euro gave up every pip gained earlier and fell close to the Sunday open price. Tonight, the euro saw a 40-pip gap.
The Euro-area adjusted trade balance was released at -5.5B in January, less than expected. In January 2009 compared with December 2008, seasonally adjusted exports fell by 16.7% and imports by 8.1%. An analysis of the trade balance over the last year shows that imports rose at a faster pace than exports mainly due to the energy component, which is also the biggest module of the trade balance

The Pound (Gbp/Usd) rose nearly 150 pips during the Asian session, as the dollar was sold across the market. However, the pound seems to have topped after the London open, close to the 100-day simple moving average. Today, the U.K.’s calendar is clear of any economic releases.

The Aussie (Aud/Usd) managed to break, without any difficulty, above the 0.6930 resistance area in the Asian session. From there, the aussie continued to advanced to TheLFB S3 (0.7000), where it topped. For now, the aussie trades at the highest value touched since January.

The Cad (Usd/Cad) tries again to break below the 100-day simple moving average. In the last two days, the pair succeeded in breaking lower, intra-day, but the pair did not find the strength to hold under the support level. Last time the cad broke successfully under the 100-day SMA was eight months ago.

The Swissy (Usd/Chf) fell 80 pips during the Asian session and tested, for a third consecutive day, the 200-day simple moving average, but again failed to break it. After the London open, the swissy surged higher and almost retraced every pip lost during the Asian session.

The Yen (Usd/Yen) traded on strong momentum overnight. The pair rose 80 pips in the Asian session, to the resistance area of the last two days of trading, but failed to break any higher. From there, the market retraced every gain made earlier, but the yen started to move higher, once again, during the London open.

The confidence seen in the Japanese manufacturing sector has fallen by the most in at least five years as the global recession produces record declines in factory outputs and exports. The sentiment seen among manufacturers was a -66.0 which is much worse than the expected -47.3 as well as below the previous number of -44.5. Japan is heading towards its worst recession since 1945 which is forcing businesses to cut spending and reduce workforces.