The U.S. dollar extended its gains for a second day after strong economic data supported confidence over the outlook, and the ECB confirmed they will continue to support economic growth in the Euro Zone region, meanwhile, clashes continued for a second day in Egypt between pro and anti Mubarak protestors, as concerns over the Middle East region mount, and fears that the crisis will spread to other neighborhood countries.
The ISM services index rose in January to the highest level since August 2005, while jobless claims dropped below estimates, as it seems that recovery in the United States is picking up some pace. Moreover, the Fed's Chairman, Ben Bernanke, said that the recovery seems to be stronger than expected; nevertheless, Bernanke still signaled that the Fed's support will continue since unemployment is still too high and inflation is still too low.
The U.S. Dollar index, which measures the performance of the U.S. dollar against a basket of currencies including the Euro, the Pound, and the Yen, rose on daily basis to trade at 77.69, compared with the opening level at 77.15, while recording a high of 77.89 and a low of 77.02. Gold prices rose to trade at $1354.00, compared with the opening level at $1334.35 an ounce, while oil prices declined to trade at $90.59, compared with the opening level at $91.08 a barrel.
The Euro declined heavily against the Dollar, as the ECB confirmed they will keep the current monetary policy unchanged where the ECB highlighted downside risks to growth continue, while that inflation risks were balanced. The EUR-USD pair is trading at $1.3649, compared with the opening level at $1.3815, while recording a high of $1.3825 and a low of $1.3616. The pair is now trading below the $1.3665 level, and so long it remains below this level, we should expect more downside movement and the target then will be the $1.3605 support level, however, if the pair rise above $1.3665, the next target will be the $1.3740 resistance level.
The British Pound declined as well today against the U.S. Dollar, where the GBP-USD pair is now trading at $1.6150, compared with the opening level at $1.6205, while the pair recorded a high of $1.6278 and a low of $1.6122. The pair is now trading above the important level at $1.6120 and so long it continues to trade above this level, the next target is set at $1.6300, however breaching the $1.6120 level to the downside would send the pair to the $1.5990 support level.
The U.S. Dollar was little changed against the Japanese Yen, where the USD-JPY pair is now trading at ¥81.46, compared with the opening level at ¥81.47, while recording a high of ¥82.06 and a low of ¥81.40. The pair is now trading below the ¥81.85 resistance level, which suggests that the way is open to reach the ¥80.35, but the pair must remain below ¥81.85 in order for this bearish scenario to continue, however, breaching the ¥81.85 to the upside would send the pair to the resistance level at ¥82.55.