The U.S. dollar is broadly bid against its major trading counterparts today, as markets remain cautious and in-demand for "safe-haven" assets as Hurricane Sandy hits the Northeastern coast and closes U.S. equity markets for the day. Time magazine is reporting on its website that Sandy will keep financial markets closed tomorrow (Tuesday) as well.
Also weighing on sentiment and driving USD demand versus EUR is the fact that Greece looks to be no closer to a deal on austerity, and that there is still uncertainty over when Spain might request aid. Greece is on the verge of bankruptcy, and needs resolution on an austerity package to receive its next tranche of aid before it runs out of money in just a few weeks. Spain is in need of a bailout and must formally request financial aid in order for the European Central Bank to buy Spanish bonds. "Unless Spain formally seeks a rescue, sentiment toward the euro is unlikely to turn positive," Reuters reports.
EUR/USD is consolidating Monday's losses around the 1.2900 figure at the Asian opening this Tuesday. Jordan Lindsey, founder of JCL's Forex, offers his weekly outlook on the euro: "The daily and 4 hour time frames are in downtrends and currently the 4 hour is setup for a nice short. Look for the lower trend line to be tested in the 1.2850 area to be tested and if that breaks for support at the 1.2815 area."
In contrast, the JPY operated horizontally as investors sat on the sidelines ahead today's Bank of Japan meeting. Markets expect a ¥10-15 trillion addition to the BoJ's AP program. "However, only a 'shock and awe' type easing would succeed in substantially weakening the JPY in our view," comments Mike Jones, Currency Strategist at BNZ. "This is unlikely. Our forecasts have USD/JPY remaining below 80.00 through to year-end."
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.