Published: Fri, 13 Mar 2009 14:44:26 +0100

Global Sentiment Continues to Dominate Euro Moves

(CEP News) - With no major data released in the European session, the euro was at the mercy of global sentiment as volatility increased in overnight trading.

During the European session, the euro hit session lows at 1.2868 USD. EUR/USD recovered, hitting session highs at 1.2958, as U.S. equity futures moved higher. However, the pair is still unable to reach 1.30 USD, which is a key resistance level. The cross is now showing modest gains, trading in the middle of today's channel.

According to some currency strategists, the euro could still be reacting to Thursday's Swiss National Bank interest rate announcement. Following a cut of 25 basis points, the central bank announced it would buy currencies to weaken the Swiss franc.

The euro was one of the main beneficiaries following the intervention announcement. Although the euro continues to trade near a one-month high, currency strategists are expecting it to struggle as it moves closer to 1.30.

Currency strategists from Brown Brothers Harriman said the euro is still firmly in its large range, with support at 1.25 USD and resistance at 1.30 USD. Looking at the short term, they said they are not expecting the euro to break above today's session highs.

Matthew Strauss, senior currency strategist at RBC Capital Markets, said currency markets will remain at the mercy of global sentiment. He added the U.S. dollar will continue to remain under pressure as U.S. equity markets continue to rally.

Euro/USD down 0.01 cents to 1.2911

USD/CAD down 0.74 cents to 1.2704

USD/Yen up 0.63 points to 98.35

GBP/USD up 0.40 cents to 1.3979

AUD/USD up 0.45 cents to 0.6592

Euro/Yen up 0.79 points to 126.97

Euro/GBP down 0.27 pence to 0.9235

GBP/CAD down 0.56 cents to 1.7755

CAD/Yen up 0.94 points to 77.43

Euro/CAD down 1.00 cent to 1.6400

The U.S. Dollar Index is down 0.24 points to 87.40

All data taken at 9:36 a.m. EDT.

By Neils Christensen, neilsc@economicnews.ca, edited by Sarah Sussman, ssussman@economicnews.ca