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Dukascopy Market Review, US Session, 27th October

Previous session overview

The U.S. dollar turned higher Tuesday, reversing an earlier loss against major currencies, after a measure of U.S. consumer confidence unexpectedly declined, sending stock indexes lower and supporting the greenback.

The euro sank to an intraday low of USD1.4787, from USD1.4857 just ahead of the data, which reported U.S. consumers are pinched over continued worry about the labor market, which is lagging other measures of economic recovery.

The Conference Board reported its consumer confidence index, which had been expected to improve, actually fell to 47.7 in October, from a revised 53.4 in September. The index had been expected to edge up to 53.2.

The Dollar Index, a trade-weighted basket of six currencies, was at 76.234 from 76.011 late Monday.

The euro and with it the appetite for riskier assets had gained briefly on the release of better-than-expected house price data earlier Tuesday, but it soon gave back those gains as investors sold off the common currency ahead of the consumer data.

The dollar climbed during overnight trade as high as JPY92.33, the highest since Sept. 21, but the greenback later trimmed some of its gains due to selling by Japanese exporters and profit-taking by some short-term players, analysts said.

Market expectation

EURUSD founds some good demand interest around USD1.4790 as the pair recovered off lows at USD1.4788 with traders suggesting some Asian CB interest kicked in, along with some quick profit-taking by shorts as the USD1.4770 technical support area provided an easy excuse to take money off the table. Broken support around USD1.4825/30 area now seen as a nearby sell zone now.

Pound saw lows around USD1.6315/10 with rate edging back, moving above USD1.6340 at writing. Offers seen placed toward USD1.6350, with interest said to extend toward USD1.6360.

EURJPY recovery in stocks and risk trades sees the cross paring earlier losses, though as yet the bounce is limited to 30-points or so. Traders reporting offers building in the JPY136.80 area, in line with the earlier breakdown point, more noted into JPY137.00.

With the gap between U.S. and Japanese interest rate a significant mover of currencies, market participants are focused on this week's U.S. government debt auctions totaling USD123 billion in value, including a sale of USD44 billion two-year notes Tuesday.

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