Previous session overview

The dollar is lower against the euro and the yen early Tuesday, as investors are booking profits for a second day after the greenback's rally in December went too far.

The euro climbed to the highest level in more than two weeks against the dollar overnight, while the dollar dipped below JPY92.

A rally in oil, gold and stocks at the start of the year also helped demand for riskier assets, luring investors away from the U.S. currency. Oil hovered close to USD82 a barrel, while gold is up 0.8%. Futures on the Standard & Poor's 500 index indicates U.S. stocks are set slightly higher.

The Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 77.330 from 77.512.

US pending home sales index dropped 16% to 96.0 in Nov, according to the National Assoc of realtors.

EURUSD recovered after worse than expected US pending home sales offset stronger factory orders. Ahead of the data release, EURUSD had dipped below USD1.44 level. After the data, EURUSD was at USD1.4421 from USD1.4412 late Mon.

Market expectation

Pound meeting resistance from offers placed above USD1.6050, as rate extends its recovery off earlier lows at USD1.5989. Resistance now seen placed between USD1.6055/65, stronger toward USD1.6085. Move up seen aided by euro-sterling's corrective pullback off earlier rally highs at stg0.9016 to stg0.8975.

USDJPY saw low prints at JPY91.48 on the last dip lower, a Swiss bank seen as an aggressor on the dip with talk suggesting stops under JPY91.48 may have been targeted and at least grazed. Further chatter speculating on fresh demand interest emerging down at the lows, invoking the name of the usual semi-official Japanese name, traders says. Pair returns to JPY91.65.

EURJPY breaks below earlier Asian lows at JPY132.13 and extends base to JPY131.92. Rate currently trades around JPY132.10 on the current bounce. Bids reported in place between JPY131.80/65, with stops on a break of JPY131.60.

The main driver for currency markets in the near term will be December's non-farm payroll numbers, set to be released Friday, traders said. Friday's U.S. December payrolls release will be key in resolving some of the concerns regarding the likely strength of the U.S. economy this year.

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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