The U.S dollar fell against most of its major currency rivals yesterday, hitting its lowest level in nearly a week against the EUR, as gains in stocks and commodities prompted investors to wade into riskier currency trades. By yesterday's close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.2250. The Dollar experienced similar behavior against the GBP and closed at 1.4740.
There was a quiet day of news from the U.S. as there were no major economic data releases on the calendar yesterday. However, FOMC Member Bullard spoke about the state of the U.S. economy. He pointed out that the U.S. economy is likely to have achieved complete recovery in the third quarter, though employment growth will continue to lag behind. This has caused investors to buy commodity-linked and higher-yielding currencies.
Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.
Today's TIC Long Term Purchase release is expected to have a strong impact on the U.S currency. Any result could be a surprise, and the dollar could go either way as a result. In any case, traders are unsure how the market will react to today's data. A weak report could feed risk aversion, boost treasuries and actually aid the dollar. Then again, a better than expected result might be seen as a sign of relative U.S. economic strength, and lift the dollar.