Afternoon Forex Overview

Previous session overview

The euro ticked slightly higher against the dollar Thursday, finding support from a successful auction of Spanish government debt that was taken as another sign that concerns over euro-zone sovereign issues have faded to the background.

The euro was steady after the European Central Bank early Thursday left key interest rates unchanged.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 82.373 from 83.510.

The Spanish Treasury Thursday sold EUR3.31 billion of a five-year government bond at its first bond auction since Aug. 5, near the lower end of its target range but at an average yield lower than secondary market levels, signaling quality bids.

The auction took place against a mixed backdrop. On the positive side, it comes as Spain's public finances are improving. But at the same time, Spain faces a possible ratings downgrade from Moody's Investors Services Inc. and uncertainties abound whether Spain's 2011 budget, due to be submitted to parliament around the end of September, will receive enough support.

EURUSD remains up on day, but coming off intraday highs, as ECB's Trichet answers questions during press conference. ECB earlier left rates on hold, as was expected.

Market expectation

For GBPUSD on the downside, below USD1.5350 (session low), next support levels lie at USD1.5325/35 (Sept 1 lows) and then probably at USD1.5300 (psycho level). On the upside, resistance levels lie at USD1.5415 (intra-day level), and above here, USD1.5455/60 (intra-day level), and USD1.5490 (Sept 1 high).

On a longer-term perspective, once below the 200-day MA, the pair is likely to consolidate between USD1.5350 and USD1.5500 before breaking higher, say analysts.