The U.S. dollar extended its gains against most major currencies on Wednesday amid the huge wave of pessimism that dominated global financial markets after Moody's downgraded Portugal's credit rating to junk, while China decided to raise benchmark interest rates by 25 basis points to control rising inflation risks, and the services sector in the United States slowed below expectations according to the ISM services index.

The huge wave of gloom in global financial markets boosted demand for lower yielding and safe assets against higher yielding assets, which sent the U.S. dollar and the Japanese Yen higher against major currencies, as investors opted to shun risky assets.

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 sharply on daily basis to trade at 75.06, compared with the opening level at 74.50, while recording a high of 75.18 and a low of 74.48. Gold prices rose as investors sought safety, to trade at $1533.08, compared with the opening level at $1512.31 an ounce, while crude oil prices declined slightly to trade at $96.91, compared with the opening level at $97.01 a barrel.

The Euro fell against the Dollar, where the EUR-USD pair is trading at $1.4332, compared with the opening level at $1.4433, while recording a high of $1.4466 and a low of $1.4286. The pair is now trading around a major support at $1.4325 level, and so long it remains above this level, we should expect more upside movement and the target then will be the $1.4440 resistance level, however, if the pair drops below $1.4325, the next target will be the $1.4265 support level.

The British Pound also fell today against the U.S. Dollar, where the GBP-USD pair is now trading at $1.5999, compared with the opening level at $1.6060, while the pair recorded a high of $1.6090 and a low of $1.5947. The pair is now trading below the important level at $1.6045 and so long it continues to trade below this level, the next target is set at the $1.5960 support level, however breaching the $1.6045 level to the upside would send the pair to the $1.6180 resistance level.

The U.S. Dollar fell against the Japanese Yen, where the USD-JPY pair is now trading at ¥80.89, compared with the opening level at ¥81.07, while recording a high of ¥81.10 and a low of ¥80.77. The pair is now trading between the support at ¥80.30 and the resistance at ¥81.50, where breaching the support would send the pair to the downside and target ¥78.40, while breaching the resistance would activate the next target at ¥82.00.