The dollar lost grounds in the market as a result of Federal Reserve Chairman Ben Bernanke yesterday stated that the fiscal policy alone will not recover the downfall of the U.S. economy hinting that the government might take more actions to revive economic growth. Also the dollar slipped versus major currencies as a result of anticipations in the market that manufacturing contracted further while retail sales are still weak while the recession continues to ravage the U.S. economy. Today the U.S. is scheduled to release retail sales for December with expectations showing a slight recovery to -1.2% from the prior -1.8% hinting that spending is still curtailed even during the holiday season.

Although the European Central Bank is expected to reduce interest rates tomorrow by 50 basis points to recover from recession which was the reason the euro was pressured lately, yet the weakness of the dollar increased the appeal of the falling euro. The pair currently trades at 1.3294 while recording a high of 1.3313 and a low of 1.3199 heading towards the resistance of 1.3328. The EUR/USD has been trading in an oversold area lately but after reaching the support of 1.3135 it could not break it as it reversed to the upside.

The pound like the euro is climbing past the federal currency but not due to its strength as investors are not focused on the slumping housing sector or the weak retail sales that continue to stagger economic growth in the UK as they head towards a prolonged recession. The GBP/USD is currently trading at 1.4604 while recording a high of 1.4623 and a low of 1.4512. For the pair on the four-hour chart we see that the momentum indicators are showing us upside momentum as the pound is rising to reach the resistance of 1.4635.

As the Asian stock markets gained in the markets gave investors optimism to start buying higher-yielding assets causing the yen to lose its grounds in the markets versus major currencies. The USD/JPY is currently traded at 89.66 while recording a high of 89.82 and a low of 89.20 as the pair is heading towards the resistance of 89.90 and if breached successfully the next target will be at 90.20.