Wednesday Forex outlook

On Tuesday, the dollar rose sharply against the yen after U.S. stock markets shot higher and on speculation the Bank of Japan may cut interest rates at a Friday meeting.

The euro continued to trade range bound against the US dollar and other major currencies. GFK German Consumer Sentiment unexpectedly jumped to 1.9 vs. 1.5 expected and the German Stock market surged 11%. EURUSD traded with a low of 1.2331 and a high of 1.2791 before closing the day at 1.2520.

The British pound gained more than 2 percent against the greenback on Tuesday, though the bulk of the move came in the afternoon as a surge in the US stock markets signaled a broad rise in demand for "risky" assets like carry trades. GBPUSD traded with a low of 1.5405 and a high of 1.6060 before closing the day at 1.6020.

The Japanese yen fell off recent 13-year highs against the US dollar on Tuesday as stock markets rebounded. The yen dropped by 11 percent to 63.21 versus the Australian dollar and 9.9 percent to 55.19 versus the New Zealand dollar.

The Canadian dollar had a slight rebound against the US dollar after falling to its lowest level in more than four years as uncertainty about the global economy weighed on the commodity-linked currency.

An overnight surge on Wall Street raised spirits in Asia Wednesday and helped the wheezing Australian dollar off its knees, though few expect the better mood to hold.