Previous session overview

The dollar pared gains against the euro but still rebounded Tuesday from the prior session's losses, as a downgrade of a major French bank resurrected worries about the European economic outlook and as enthusiasm over China's currency strategy faded.

The euro bought USD1.2293, down from USD1.2318 in late North American trading Monday.

The dollar index which tracks the U.S. unit against six major counterparts turned down 85.947, from 86.023 on Monday.

Cutting into the index's gains, the British pound turned higher after Chancellor George Osborne's U.K. emergency budget proposed 40 billion pounds (USD59 billion) in spending cuts and tax increases a year by 2015.

The pound rose to USD1.4816, up from a low of USD1.4686 in earlier trading and up nearly 0.3% from Monday.

Against the Japanese yen, the dollar fell to JPY90.75, from JPY91.97 late Monday.

Market expectation

Trading analysts said investors trimmed expectations that China's plans to loosen its so-called peg against the dollar will boost global economic growth.

Beijing's weekend announcement had spurred a sharp rally in stocks, commodities and currencies highly sensitive to economic growth such as the Australian dollar to start the trading week, while weighing on investments seen as safety plays   including the U.S. dollar.

Euro is back under pressure, and Wall Street falling ads to the bias. Hourly indicators give no clear cue at this point, mostly flat under their mid lines, while pair still needs to break under USD1.2240 to confirm a fall: under the level, stops loses should be gathered, and pair likely to quickly accelerate towards strong USD1.2200 static support area.

Disclaimer: the data made available by Dukascopy (Suisse) SAis for informational purposes only. Publication of this data by Dukascopy (Suisse) SA does not constitute provision of investment advice and Dukascopy (Suisse) SA assumes no responsibility with regard toany information, forecast or recommendation herein contained and assumes no responsibility with regard toany losses resulting from any activities conducted the basis of this data, including any investment decisions.

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