Overall, the currency market began buying dollars just before the London open. Moreover, dollar strength continued during the European session, despite the positive overnight markets, which should have helped the majors advanced against the greenback. Ahead, the market is preparing for the FOMC, which will probably set the direction of trading for the next period.

The Euro (Eur/Usd) moved only 80 pips during the overnight session. The pair was gaining ground in the Asian session, but before the London open, the euro saw strong selling orders, which helped the pair break below the 1.3000 level. Previously, the euro had strengthened for six consecutive days.

The Pound (Gbp/Usd) traded in a tight, 40-pip range during the Asian session, but eventually the pair broke lower during the European session. Shortly before the London open, the pound plunged 140 pips, ahead of the employment data. The pound had a very busy release calendar during the European session which provided additional volatility.

The unemployment rate increased again in the U.K. in the latest three months to January 2008, to the highest rate seen in the last decade. The annual rate of growth in average earnings including bonuses was 1.8% in the three months to January 2009. The number of people seeking unemployment increased again in February, to the highest value in the last 12 years. The report shows there were 1.39 million persons on the claimant count in February, and up by 138,400 from one month earlier

The BoE’s minutes from the meeting held at the beginning of March shows that the committee had voted unanimously to reduce the Bank Rate by 50 basis points. Additionally, the Committee also voted unanimously that the BoE should use up to 75 billion pounds over the next three months to buy corporate debt and U.K. gilts.

The Aussie (Aud/Usd) has traded with very weak momentum in the last two day of trading, as the pair is trapped between the 50 and the 100-day simple moving averages. During the Asian session, the aussie traded between the high of the last day of trading and the neutral pivot point (0.6605), but the support level gave way during the London open.

The Australian MI leading index came in at a -0.2 percent month over month after a -0.4 percent decline was seen on the previous figures reading. This has raised speculation that the nation is expecting to enter its first recession since 1991. The economy shrank 0.5 percent in the fourth quarter of 2008. This was the first contraction seen in eight years as consumers limited spending and exports slowed.

The Cad (Usd/Cad) struggled again to break below the 1.2680 support level during the overnight session, and is currently trading just above that support level. A similar pattern was seen in the last day of trading, when the cad could not muster enough momentum to break the support level. On the upside, the pair struggled with the 20-day simple moving average during the overnight session.

The Swissy (Usd/Chf) managed to break below the low of the last two days of trading, but the pair traded side-ways overall. In the last three days of trading the swissy has consolidated, as the SNB threatened to intervene in the currency market.

Swiss retail rose more than expected in January, compared with one year ago. Over the last few months, retail sales had risen strongly, but it seems this trend will reverse, in-line with the fatigue seen in the economy.
The Yen (Usd/Yen) fell to TheLFB S1 (98.25) during the Asian session, ahead of the BoJ statement, but then recovered every lost pip during the rest of the overnight session. Currently, the pair trades close to the 99.00 resistance area, where it had also topped the previous day.

The Bank of Japan decided by a unanimous vote to maintain the Overnight Call Rate at 0.10%. Having the lowest rate amid industrialized countries, economists argued that the low interest rate will not provide strong enough relief to the Japanese economy, and that the central bank has mostly depleted its powers to influence the business cycle by using monetary policy.