Dollar Falls on Improved Sentiment

by: CMS Forex
The dollar fell versus most other key currencies on Tuesday as risk appetite increased after Treasury Secretary Timothy Geithner said the “vast majority” of US banks are well capitalized. The yen fell as the Dow rose 128 points to 7,970. Sterling found support at the 1.45 handle ahead of tomorrow’s UK budget announcement. The Canadian dollar rose modestly despite the Bank of Canada’s unexpected 25 basis-point rate cut. The Australian dollar advanced on improved risk sentiment and comments by Reserve Bank of Australia Governor Glenn Stevens that Australia’s economy will “weather the storm better than most.”

The EUR/USD rose modestly for the first day in six as the ZEW German business confidence index turned positive for the first time since July 2007. The pair has been pressured by rising risk aversion and questions on the European Central Bank’s policy response to the deepening European recession. The short-term trend for the EUR/USD is negative. There are resistance in the 1.31-area and support in the 1.28.