FX round-up: Euro trades at two-year highs aided by continued dollar weakness

Currency movements in Tuesday's session were a little more exciting than they were at the start of the week, with sterling up against the dollar and the euro following suit, with EUR/USD trading at two-year highs.

The pair started the trading day off at 1.1664, managing a day high of 1.1713 by 1400 BST, but soon gave back those gains by 1600 BST to trade at 1.1662. Resistance can be seen at 1.1700 which kept the euro from trading any higher.

Thanks to a weakening dollar since the start of the year, EUR/USD could well be eyeing the August 2015 high of 1.1714 next.

VTB Capital's Neil Mackinnon said: "At the start of this year, the expectation in the FX market, as reflected in the forecasts of currency strategists, was that the US dollar would appreciate and outperform its major counterparts.

"Many forecasters were predicting a move to parity by the end of this year in the EURUSD exchange rate, including ourselves, though we amended that projection to 1.08 and pushed forward the parity forecast to the end of 2018."

Meanwhile, cable had a slow start to the trading day, kicking the session off at 1.3038 before hitting a day low of 1.3008 and posting significant gains by 1400 BST where it was trading at 1.3075, despite the UK Confederation of British Industry's industrial order expectations coming in below forecasts of 12 at just 10.

However, sterling sold off into the late afternoon to trade at 1.3035 by 1700 BST.

Market analyst David Madden at CMC Markets said: "Today was largely as poor day for the greenback rather than a strong day for sterling."

The Bank of Japan released the minutes from its 15 and 16 June meeting in which it discussed money market operations, developments in financial markets and economic and financial developments in Japan. In it, the BoJ acknowledged that Japan's economy had been turning towards a moderate expansion and that exports have been on an increasing trend, thanks to emerging markets picking up.

USD/JPY had some respite on Tuesday after the continued push lower seen since 11 July, finding support at 111.11 which helped the pair achieve a day high of 111.69 and trade at 111.61 by 1600 BST.