Yen Gains On Short-Covering

The greenback's recent rally against the Japanese yen stalled ahead of April's 4-year high at 99.95 and the key option barrier at 100.00. The pair was pressured in New York morning due to the weak U.S. existing home sales.

The greenback opened higher in New Zealand and rose to session high at 99.89 in Australia after the G20 gave Japan the nod to its aggressive monetary easing policies and continued to trade sideways throughout Asia. However, dollar met good resistance ahead of the key 100 barrier option, price fell to an intra-day low at 98.98 in New York morning due to long-liquidation together with the weak U.S. existing home sale and then traded narrowly in U.S. afternoon.

U.S. existing home sales in March dropped by 0.6% to 4.92M, weaker than the forecast of 5.01M.

Although the single currency opened higher and rose to 1.3093 in New Zealand due to cross-buying of EUR/JPY, price retreated to 1.3054 ahead of Asian open. Despite a brief rebound to 1.3084 in Asian morning, euro retreated again on expectations of a possible interest rate cut from the European Central Bank and dropped to an intra-day low at 1.3015 in New York morning. Later, price pared intra-day losses and rebounded to 1.3069 in New York afternoon.

The British pound remained under pressure in New Zealand and dropped to session low at 1.5202, however, price rebounded to 1.5246 in Asian morning before retreating again to 1.5211 in early European morning. Later, cable strengthened on speculation UK will avoid a triple-dip recession and rose to an intra-day high at 1.5274 at New York midday.

In other news, ECB Vice-President Vitor Constancio said 'ECB interest rate cut is always a possibility, depends on information.'

On the data front, Chicago Fed nation activity index in March came in at -0.23, prior reading is revised to 0.76.

Data to be released on Tuesday:

Australia conference board leading index, China HSBC manufacturing PMI, Swiss trade balance, France business climate, manufacturing PMI, services PMI, Germany manufacturing PMI, services PMI, EU manufacturing PMI, services PMI, Italy consumer confidence, UK PSNCR, PS net borrowing, Canada retail sales, U.S. redbook retail sales, house price index and new home sales.