The Dollar strengthened throughout most of last week. The Dollar reached a 9-month high against the Euro as the EUR/USD dropped to the 1.3445 level. The Dollar rose against the Pound and the Yen as well during last week's trading session.
The Dollar continued to strengthen last week, mostly due to positive data from the U.S. economy. Several economic indicators that were published last week produced positive signs for the economy, helping to strengthen the Dollar. The Long-Term Purchases report showed that foreign investors have a strong faith in the U.S. economy. In addition, the Building Permits for January showed a continuous progress in the American housing sector. This holds an immense importance as the housing sector is what initially caused the financial crisis and recovering signs of it proves that the crisis is behind us.
However, the Consumer Price Index, which was published on Friday, showed a decreasing pace of inflation. The U.S. economy is still in fears from deflation, and thus the negative figures have an instant impact on the Dollar, which dropped slightly against the major currencies.
Looking ahead to this week, many interesting economic publications are expected from the U.S. The most impacting news events look to be the Consumer Confidence, the New Home Sales, the Durable Goods Orders indices and the Preliminary Gross Domestic Product. If the U.S. economy will continue to provide positive data this week as well, the Dollar is likely to continue to strengthen against the major currencies.