It’s been a mixed bag for the Euro with the Greek bailout expected to be signed tomorrow (I’m sure the PSI’s will be applauding warmly.) but with Spain now in focus as EU leaders raise further concerns over its debt.

EURUSD tried to break back down below 1.3100 a couple of times but eventually the shorts were squeezed once we climbed through the 1.3150 level I mentioned yesterday. Overnight we’ve been as high as 1.3192 but since fallen back on a Euro reality check and we’re now down to 1.3136.

The Pound came in for another slap but GBPUSD held firm at 1.5600 where large buy orders are rumoured to be sitting and we’ve seen a levelling out across the board, but not before EURGBP broke higher to peak at 0.8425 (GBPEUR down to 1.1868) in Asia, but then fall back to 0.8380 (1.1934).

A downgrade by Fitch of the Australian banking group Macquarie piled more pressure on the Aussie $ but it too has recovered a little as traders remain cautious of being too exposed in anything ahead of the US Fed’s interest rate decision tonight and accompanying FOMC statement.

Forex Brief Tues

Forex Update

Given recent positive data we should be expecting less dovish talk on Q3 and perhaps more importance placed on inflation concerns, both of which should be USD positive. But we know the Fed and Mr Bernanke don’t always give what the market expects.

Last night the Bank of Japan left interest rates on hold as expected but gave further warning that continued easing of monetary policy is still very much on the agenda.

So it’ll be nip and tuck today for traders ahead of tonight’s announcement, many of whom from the UK will be making the annual exodus to the Cheltenham horse racing festival which opens today. Anyone with hot tips for the week please feel free to get in touch!

Agree or disagree? Then please leave a comment in the box below or contact me by e-mail.

Mike ‘Oscar’ Paterson has been in the Forex trenches for nearly three decades working as a senior Spot trader in London at UBS, Chief Dealer FX at the State Bank of Victoria and in charge of Spot CHF at Credit Suisse with a daily turnover in excess of $1.5 billion. Mike now works as an independent consultant providing a fully bespoke service to the corporate and private sectors in physical FX delivery as well as guiding those who wish to improve their currency trading. Mike also presents seminars and workshops and writes for a number of publications.
To contact Mike please call +0044 (0) 1732 700383 or email
The views expressed above are those of the author and should not be taken as investment advice. MSP Foreign Exchange Services will have no liability for, or to, any persons executing trades based on the content above.

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