The U.S. dollar declined against major currencies after Fed's Chairman Ben S. Bernanke signaled in his testimony before the House Budget Committee that inflation is still well below the Fed's target, while labor market conditions are still weak although improving at a very slow rate, Bernanke also warned from the rising budget deficit, where Bernanke believes that actions need to be taken in the future to reduce the deficit.
Bernake's remarks confirmed a speech made by Bernanke last week, however, some analysts expect the Fed to withdraw QE2 soon, nevertheless, Bernanke's speech today confirmed that the Fed will continue with their $600 billion QE as planned, and that interest rates will remain low for an extended period.
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, declined on daily basis to trade at 77.70, compared with the opening level at 77.96, while recording a high of 78.10 and a low of 77.61. Gold prices were little changed despite the dollar's weakness, as gold traded at $1362.89, compared with the opening level at $1362.36 an ounce, and crude oil prices declined to trade at $86.68, compared with the opening level at $87.45.
The Euro inclined against the Dollar today, where the EUR-USD pair is trading at $1.3710, compared with the opening level at $1.3625, while recording a high of $1.3724 and a low of $1.3610. The pair is now trading above the important level at $1.3640 and so long it continues to trade above this level, the target is set at the $1.3750 resistance level, but breaching the support at $1.3640 to the downside would send the pair to the support at $1.3575.
The British Pound also inclined against the U.S. Dollar, where the GBP-USD pair is now trading at $1.6094, compared with the opening level at $1.6063, while the pair recorded a high of $1.6124 and a low of $1.6033. The pair managed to settle above the $1.6010 level, and accordingly it should continue to rise towards the $1.6150 resistance level, but breaching the $1.6010 to the downside would reactivate the target at the $1.5905 support level.
The U.S. Dollar was little changed against the Japanese Yen, where the USD-JPY pair is now trading at ¥82.30, compared with the opening level at ¥82.29, while recording a high of ¥82.42 and a low of ¥81.77. The pair is now trading below the ¥82.50 resistance level, which suggests that the way is open to reach the ¥81.05, but the pair must remain below ¥82.50 in order for this bearish scenario to continue.