Morning Forex Overview

Previous session overview

The euro fell against the dollar and the yen in Asia on Monday as European authorities at the weekend meeting of financial heads from the Group of Seven failed to offer realistic plans to help Greece out of its debt woes.

European Central Bank President Jean-Claude Trichet said Saturday in Iqaluit, Canada, where the G-7 meeting was held, the ECB expects 'the Greek government will take all necessary decisions' to cut its debt burden, while the ECB 'will continue to monitor closely' these steps.

Last week, Greece told the European Commission it would decrease its debt to 3% of gross domestic product from 13% currently. But market participants don't believe the plan is realistic, continuing to exert downward pressure on the European common currency, dealers said.

The euro sank Friday as sovereign debt weighed heavily on markets, with investors focused on fiscal issues in deficit-laden Greece spreading to Portugal and other euro-zone economies.

The Pound tumbled against the US dollar on the US jobs data and Euro zone sovereign debt problems. UK's own debt problems and uncertainty ahead of an election in June continued to pressure the sterling lower. The Bank of England left rates unchanged yesterday and suspended its 'quantitative easing' program.

The Australian dollar ended little changed in Asia and government bonds ended mixed as regional markets bided their time looking for fresh leads from U.S. and European markets later today

Market expectation

The pound, euro and dollar are a bit lower against the yen on Monday as some investors outside Japan sought some risk protection on residual worry about the euro zone and prospects for weaker stock markets.

Traders said in the absence of surprises from the weekend meeting of the Group of Seven nations in Canada, the focus will remain on fiscal issues bedeviling some of the European nations.

For EURUSD traders says that he has seen no sign of the major Asian sovereign buying but suggests they may emerge below the figure, noting option barrier levels at USD1.3575, USD1.3550 and larger at USD1.3500. Rate currently trades around USD1.3635. Light data calendar for the day so attention on any euro zone developments. Bids remain USD1.3620/00, more toward USD1.3580. Offers seen placed at USD1.3645/50, more toward USD1.3660.

For Pound support now seen placed at USD1.5550, with further interest said to remain around USD1.5535/30 ahead of stronger interest between USD1.5515/00 and ahead of USD1.5450. Resistance now seen placed at USD1.5585 ahead of USD1.5600 and stronger interest at USD1.5620/2.

While further gains in the yen are expected, investors should be cautious about the Japanese authorities acting to keep the dollar from falling below JPY87, said analysts.

European stocks are expected to open higher Monday, taking their cue from a late rally on Wall Street Friday.

Dukascopy Swiss FX Group