The Japanese yen and U.S. dollar fell on Tuesday, paring their earlier gains this month on the back of debt woes in Europe which enhanced demand on refuges, as the rebound in Asian stocks and Japan's Social Democratic Party left the government. Political instability in Japan prompted investors to sell the yen which was the biggest winner this month. The dollar fell today against a basket of major currencies; the dollar index slipped to 86.62 from the day's opening at 86.80. In general, volume is low today in markets due to Memorial Day holiday in the U.S. and Spring Bank Holiday in the U.K.
With regard to the euro-dollar pair, it rebounded slightly on the daily basis after the most severe monthly decline since January 2009. The 16-nation currency is girding for nearly 8% decline against the greenback in May after sliding to the lowest level in four years this month. However, the euro remains under pressure especially after Fitch downgrade to Spain from top credit rating to AA-; while France mentioned that keeping its top credit rating will require budget cuts. Today's data showed economic confidence plummeted in May to 98.4 from 100.6 a month earlier, but business climate indicator surged to 0.34 during the same month from the revised reading of 0.28. Currently, the pair is trading at 1.2291, recording a high of 1.2333 and a low of 1.2257. For the rest of the day, the pair is predicted to move between support and resistance at 1.2260 and 1.2365 respectively.
As for the sterling-dollar pair, it is showing incline on the daily charts, after moving sideways over the past two weeks where the pair has been moving around 1.4334. Meanwhile, the pair is trading at 1.4480, after reaching a high of 1.4518 and a low of 1.4395 while it is expected to move between support at 1.4405 and resistance at 1.4520.
Relative to the dollar-yen pair, it surged to 91.49 but it stopped its advance after approaching strong resistance at 91.65. Political shakiness ahead of Parliamentary elections two months from now along with the advance in Asian shares eroded the appeal of the yen as a safe haven. Earlier today, the pair hit a high of 91.60 and a low of 90.87, whereas support is seen at 90.60 while resistance is at 91.95.