• EUR/USD +1.4%
• GBP/USD +1.2%
• AUD/CAD +0.9%

EUR/USD

Inflation Suggestions Spark Euro Rally: Euro bidding was in full force for the session, as inflationary suggestions bolstered probable rate tightening by the European Central Bank in coming months.  According to the Federal Statistics Office, German producer prices rose 5.9 percent, the fastest annual rate in 24 years and above the consensus figure.  Coupled with thin holiday markets, as some regions continue to observe the Easter holiday, the release boosted speculation of rates in tandem with further central bank diversification tips.  Initially rising to the 1.2150 region, bigger German bids flushed the market higher propping up the price action through the 1.2200 resistance, finally topping out at 1.2300.  Now with eyes set fully focused on the 1.2300 handle, the 1.2350 figure comes into play on an upcoming option barrier.  Higher strikes are noted should the price action break the handle at 1.2400 and 1.2450.

Rumorville: Offers are keeping the pair lower as we head into Asian session trading with selling interest residing at the 1.2250 figure and slightly higher at 1.2265 and 1.2275.  The pair looks bid throughout till the overnight as notable central bank bids surround dips at 1.2215 and the even figure.  Stops are subsequently stationed below with heavier size at 1.2165.

GBP/USD

M&A Still Props Up Pound: Traders bid the sterling higher following increased speculation of a halt on U.S. securities purchases by the Peopleââ,¬â"¢s Bank of China near the close of the overnight session.  Coupled with the dour U.S. manufacturing data, the news offered traders the opportunity of a 235 pip range for the session as stops were triggered throughout the session bolstering the price action higher.  Notably, the 1.7700 figure came into play, signifying a technical break above the 1.7600 handle as further M&A conversion added to the climb.  Looking ahead, with traders returning from the extended weekend, the housing data looks to contribute little to certain realignments following todayââ,¬â"¢s advance, leaving some to look forward to the consumer price data rather than further suggestions of stabilization in the housing sector.  Although expected for the most part to climb in line with estimates, a higher figure would boost further speculation of a stable repurchase rate.  The results may be exacerbated as market participants seemingly shift to a dollar bearish bias.

Rumorville: An advance to 1.7750 may produce sellers with light interest at the round figure, keeping the price action contained.  Traders would be wary of fluctuations in the London session as realignment is sure to follow the open.

AUD/CAD

Canadian Business Sentiment Dour: Market participants favored the Australian major leg as considerable bidding occurred against the U.S. major currency on a Wall Street Journal article favoring a Fed halt bias.  However, with the AUDCAD cross pair, the boost came on the heels of lower than expected business outlook sentiment.  According to the central bank release, Canadian businesses are rather pessimistic of near term demand as it seems that overall production will be afforded some slack.  As a result, nascent speculation was sparked on a possible halt to rising Canadian rates giving the Aussie a bid bias throughout the session.  Topside gains were capped, momentarily, as the major leg encountered a well protected option barrier at 0.7350.  Breaking through, traders are now eyeing the 0.7500 figure as another formidable option level exists, adding to considerable up side in the cross pair.

Rumorville: Selling pressure resides at the 0.7385 and 0.7390 figures, right above the dayââ,¬â"¢s high as profit taking is surely to ensue.  However, plenty of buyers remain slightly below on further momentum higher at the overnight open.  Levels point to bidding at the 0.7370 and 0.7350 figures.

Richard Lee is a Currency Strategist at FXCM.