Inflationary levels are below the desired areas, and with weak recovery and a fragile jobs market, in addition to the rapid appreciation for the dollar in the past period all will keep the pressure on the feds to prevent deflation, which is why they introduced the QE2!
The data today confirmed that the Feds will continue its ongoing policy and need to support the waning recovery with its treasury purchases.
The dollar fell miserably after the data down from the high recorded earlier today at 80.30, where it fell to the low of 79.42 where most traders considered the data as negative and affected the dollar's strength instead of increasing haven demand.
On the back of the dollar's strength, and despite of the ongoing debt burden on the euro, the common currency enjoyed the advantage and extended the gains. The euro rose from the lows recorded at 1.3191 where it rallied after the data to 1.3373 the highest for the day. Trading is still biased to the euro, the pair currently hovers above 1.3285 which was a resistance and now became a new support for the pair, while facing the resistance at 1.3390. Breaching 1.3390 will support the continuation of the upside trend for the pair.
As for sterling, it also gained upside momentum from the dollar's weakness. This upside momentum was when the pair reached the low levels today at 1.5578 supported by the demand found in support areas at 1.5595 and 1.5550. Following the NFP the pair inclined further recording the high of 1.5705. If the pair was able to stabilize above 1.5700 the upside move might prevail towards 1.5775.
As for the Japanese yen, the pair recorded the high of 83.88 and declined from there to so far set the low of 82.51, where haven demand and the dollar weakness of course supported the yen over the dollar. Trading is caught between the support at 82.15 and the resistance at 83.55 and failure to stabilize above 83.55 and the critical resistance at 84.00 will extend the bearishness for the pair towards 81.50 areas and maybe 81.05 in the coming period.