U-Turn Forex

The dollar remained broadly lower against a basket of other major currencies on Wednesday, as markets were jittery ahead of the Federal Reserve's monthly policy statement due later in the day.
Investors eyed the Fed’s rate statement later Wednesday for any clear signal about a possible timeline for hiking interest rates, which have remained close to zero since late 2008.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.08% at 95.15.
EUR/USD rose 0.28% to 1.1278 after data showed that euro zone consumer price inflation increased by 0.3% last month, in line with expectations and unchanged from a preliminary estimate. Euro zone inflation was flat in April.Core CPI, which excludes food, energy, alcohol, and to***co costs rose by 0.9% in May, unchanged from an initial estimate and up from 0.9% in April.
But the euro's gains were held in check as concerns over the approaching deadline for Greece’s repayments to the International Monetary Fund persisted.
Europe wants Greece to make spending cuts worth €2 billion in order to secure a deal that will unlock additional funds before its bailout expires at the end of June and it must repay €1.6 billion to the IMF.
A default by Greece could lead to the country’s exit from the euro area.
The pound was also higher, with GBP/USD up 0.58% to one-month highs of 1.5733 after data showed that U.K. average weekly earnings, including bonuses, rose by 2.7% on a year-over-year basis in the three months to April, up from an annualized 2.3% in the previous three month period.
Economists had expected pay to rise by 2.1%. Excluding bonuses, earnings also rose 2.7% from a year earlier.
The number of people in employment rose by 114,000 in the three months to April and the unemployment rate remained unchanged at a six-year low of 5.5%.
At the same time, the minutes of the Bank of England’s June meeting showed that policymakers voted unanimously to keep rates on hold at a record low 0.5%, but the decision continued to be “finely balanced” for two officials.
Elsewhere, the dollar was higher against the yen, with USD/JPY up 0.46% to 123.94 and lower against the Swiss franc, with USD/CHF retreating 0.62% to 0.9264.
The Australian and New Zealand dollars were weaker, with AUD/USD tumbling 0.91% to 0.7681 and with NZD/USD down 0.78% to nearly five-year lows at 0.6933.
Meanwhile, USD/CAD edged up 0.13% to trade at 1.2310.

The euro was broadly lower on Monday after last ditch talks between Greece and its international creditors ended without an agreement on a cash-for-reforms deal on Sunday night.
EUR/USD was down 0.35% to 1.1222 from 1.1266 late Friday.
Talks in Brussels between Greece and European Union representatives failed to reach an agreement on pension reforms, budget targets and tax rates, adding to fears over a debt default that would threaten Greece’s future in the euro zone.
Europe wants Greece to make spending cuts worth €2 billion, to secure a deal that will unlock additional funds before its bailout expires at the end of June and it must repay €1.6 billion to the International Monetary Fund.
EU officials blamed the collapse in talks on Greece, saying it had failed to offer any new reforms to secure the funding it needs.
In a newspaper interview published on Monday Greece Finance Minister Yanis Varoufakis ruled out a Greek exit from the euro area, adding that debt restructuring was the only way forward.
Investors were looking ahead to a meeting of euro zone finance ministers on Thursday, which was being seen as Greece's last chance to strike a deal.
The single currency was also lower against the yen, with EUR/JPY slipping 0.16% to 138.73.
Meanwhile, the dollar was steady against the yen, with USD/JPY at 123.44.
Investors were looking ahead to the outcome of Wednesday’s monetary policy meeting and rate statement by the Federal Reserve for a clear signal on when it could start to raise interest rates.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.17% to 95.4.

The euro slipped in early Asian trade on Monday, after Greece's talks with lenders to avert a default ended with no agreement and a downbeat day on Wall Street was also likely to pressure Asian shares.
U.S. stock futures were down about 0.4 percent .
European Union officials blamed the collapse of the talks on Athens, which it said had failed to offer any new concessions to secure funding it needs to repay 1.6 billion euros ($1.79 billion) to the International Monetary Fund by the end of this month.
The euro skidded 0.4 percent on the day to $1.1215 , and was down 0.5 percent against the yen at 138.28 (EURJPY=).
The Japanese edged up against the dollar, with the U.S> unit falling about 0.1 percent on the day to 123.30 yen.
The euro "remains vulnerable after weekend talks end with no deal," Richard Cochinos, head of Americas G10 FX strategy at Citi in New York, said in a note to clients.
On Friday, shares on Wall Street dropped after upbeat consumer data capped a week of solid economic reports that back the view that the U.S. Federal Reserve was on track to raise interest rates as early as this autumn.
For the week, the S&P 500 (SPX) and the Dow Jones industrial average (DJI) logged slight gains, while the Nasdaq Composite (IXIC) edged down.
The U.S. central bank's policy-setting committee will hold a regular meeting on Tuesday and Wednesday this week.
Crude oil futures slipped in early trading, extending the previous two session's declines as investors took profits on worries that higher Saudi Arabia output would feed the global supply glut.
Brent crude shed about 0.9 percent to $63.32 after gaining 0.7 percent for the week, while U.S. crude fell 0.3 percent $59.79 after gaining 1.5 percent on the week.

EUR/USD is enjoying (or suffering) significant volatility. What’s next for the world’s most popular currency pair?
The team at Morgan Stanley examines the key triggers and provides three charts:
Here is their view, courtesy of eFXnews:
Morgan Stanley picks EUR/USD as its technical FX chart of the week, where MS is still bearish medium-term. In particular, MS provides the key trigger level (underlined below) to confirm the resumption of the next leg down of EUR/USD (base case) and the key trigger level for another corrective leg higher (risk scenario).
On the long-term EUR/USD Chart
“Despite the corrective rebound developed since early March, EURUSD remains within a long term down trend, which accelerated from June of last year. Indeed, this move lower over the past year forms part of a C wave decline within a broad multi year corrective structure which has developed since the 1.6038 peak of 2008. The pace of decline over the past year is typical for a C wave. This suggests upside potential is limited for EURUSD,” MS notes.
“The sub-structure of the decline from June of last year has been “impulsive”, with a 3 rd wave within the C wave now developing. The subsequent recovery since March has developed a clear 3-wave corrective structure, which now looks to have been completed at the 1.1467 mid-May peak (4th wave top within wave (3).This implies the next stage of the EURUSD decline (5th wave within wave (3)) is now likely to unfold,” MS projects.
“This bearish interpretation will be confirmed by a move below 1.1005, suggesting the next impulse decline is set to take EURUSD below the 1.0854 level and back to the 1.0458 March low. This even implies a move to new lows with potential for a decline below parity over the medium term. Near-term risk to this scenario is a move above 1.1467, which would suggest another corrective leg higher before the downtrend resumes.” MS argues.