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Overall, the dollar was driven higher in the currency market as the global markets re-entered risk-aversion mode. The major pairs started their decline in the Asian session, and continued throughout the U.S. trading hours. Currently, the majors are trading near important price points, which may require additional momentum to be broken. As such, the major currencies’ declines may break for now, but resume later if the market picks up a surge in momentum and volume. 

During the U.S. session, a report showed the demand for U.S. assets dropped in April, breaking free from the strong reports seen in the previous few months. The drop in U.S. assets bought by foreigners came mostly as China, Russia, Japan and Brazil – the biggest holders of U.S. debt – reduced their purchases in the month of April. 

The Euro (Eur/Usd) declined 220 pips on Monday, the most since late April. The euro’s decline came as the dollar was driven higher against the major currencies by risk-aversion. The euro was trading just below the 23.6% retracement area from the uptrend that has lasted since March at the Sunday open, but with today’s declines, the euro is currently trading near the 38.2% retracement area of the same trend.  

The Pound (Gbp/Usd) broke its correlation with the rest of major currencies during Monday’s trading session, something that does not happen often. As such, the pair declined to TheLFB S1 (1.6310) during the Asian session, but from there the pound surged higher, almost erasing every pip lost earlier in the day. During the U.S. session, the pound resumed its downtrend, following the rest of the major pairs. 

The Aussie (Aud/Usd) lost almost 160 pips or 2.40% since Monday’s open, being the major pair that posted the biggest declines in percentage terms. Throughout Monday’s trading hours, the aussie moved lower in steps, something that denotes the pair’s weakness. For now, the aussie is testing the 20-day moving average.  

The Cad (Usd/Cad) had very thin volume in the first part of the overnight session, but despite this, the cad was still able to advance and break above important price points. The pair continued its advance during the European and the U.S. sessions, struggling to break above the 23.6% retracement area from the downtrend that has lasted since March. 

The Swissy (Usd/Chf) gained 150 pips during Monday’s trading session, as the dollar strengthened across the market. A considerable part of the gains came during the early European session, something that does not happen very often. For now, the swissy is trading just below the 1.0950 resistance level. 

The Yen (Usd/Yen) spent most of the overnight session trading in 50-pip range, slightly above the neutral pivot point (98.10). However, the pair managed to break the support area during the U.S. open, but still the pair’s moves appear relative modest. On the daily chart, the yen is trading just below a resistance trend-line that connects the highs touched on 08.15.2008 and on 06.04.2009. During the Asian session, the Bank of Japan is expected to maintain the monetary policy rate at 0.10%.

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