Monday, February 7, 2011

Forex | Afternoon Overview | 7 February 2011

Forex | Afternoon Overview | 7 February 2011

Previous session overview : The euro's slide against the dollar extended into a new week Monday after a disappointing German economic report.

Losses accelerated after the common currency fell through the key 100-day moving average around USD1.3530, triggering additional sell orders.

Traders in the past few days have begun unwinding long positions they built up in the euro during January, adding to the losses in recent days.

The currency fell to a two-week low Monday against the dollar after release of news that German manufacturing orders fell by 3.4% in December; more than double the 1.5% decline in orders that forecast.

Trichet backed off previous comments late last week, saying the euro zone's interest rates were currently at proper levels. That disappointed market participants who had been building in expectations that the central bank would hike rates to combat coming inflation. Last month, Trichet sounded hawkish and hinted at future rate hikes, leading to a steep rally in the euro.

The euro was at USD1.3512 in morning trading in New York from USD1.3582 late Friday. The euro dropped as low as USD1.3508 earlier in the day, its lowest level since Jan. 21.

The euro was at JPY111.57 from JPY111.67 late Friday, while the dollar was at JPY82.35 from JPY82.20. Read more