Surging crude oil and falling consumer confidence helped drive the Dollar lower against the Euro. Traders are expressing concerns that the higher crude prices may trigger an economic slowdown.

It was a tough week for the U.S. economy. Despite recent talk that the Fed may be ending its cycle of interest rate reductions, there are still concerns in the Forex community that the U.S. economy may not be robust enough to avoid a prolonged economic drawdown, or in the worst case, a recession.

A series of U.S. economic reports this week ending with weak consumer confidence on Friday suggest that there is still weakness in several sectors of the economy despite the Feds efforts to stimulate the economy with interest rate cuts earlier in the year.

Watch the financial markets in Chicago to see if traders begin to price in the possibility of another rate reduction at the next Fed meeting on June 25.

The EURUSD finally turned the daily trend up on the trade through 1.5595. The first upside target is 50% of the break from the all-time high at 1.5651. If this area gets broken, then look for a further rally to 1.5738.

USDJPY Weakens on Uncertainty in U.S. Economy and Lower Stock Market

Sellers hit the USDJPY on Friday as the U.S. Stock market broke as crude oil surged to new all-time highs. With the future of the U.S. economy uncertain, traders flocked to the Yen for safety.

For the third day in a row, traders appear to be reluctant to buy Dollars at current levels so close to the old top at 105.71. The selloff formed a secondary lower top at 105.43.

The lower close suggests more downside is likely with 102.56 the next target. A break through this price will change the trend to down. The market could then begin to accelerate down to 100.72.

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