Forex Market Update: Euro Under Pressure as IMF Calls For Further Easing

Despite the retreat in the dollar on Monday in NY, the dollar again re-asserted itself in Asian trading on Tuesday, led by fresh EUR losses in a delayed reaction to comments Monday from the IMF, that the eurozone recovery is uncertain, that the ECB should ease further and that Europe should launch a cleanup of its banking system. News that Obama[U] [/U]administration was going to call for tougher European bank stress tests, also added to the pressure on the EUR. EUR/USD fell from morning highs of 1.3936 to lows of 1.3854. The subsequent pressure on EUR/JPY, which fell from 137.32 to 135.70, also weighed on USD/JPY which finally broke out of the 50 point range around 98.50 to trade to lows of 97.88. AUD, NZD, CAD and GBP all weakened in line with the EUR. NYMEX crude was stable above $68 and gold bounced slightly but Asian stocks came under selling pressure with Taiwan falling over 3% and trading to a one-month low. Treasury yields retreated slightly from the fresh highs made on Monday as the market squared up slightly ahead of the U.S. $65 billion auction this week.