After the strong gains that the dollar managed to record last Friday, following the wave of pessimism that captivated markets, we can see greenback aiming at holding its gains, yet so far the attempts were fruitless as the euro regained its appeal and settled above major levels at 1.5035 and the yen is gathering momentum to lead another wave of gains versus the dollar.
The rise in annual CPI inflation in the euro area by 0.6% exceeded expectations and supported the euro's gains to rise from the lowest recorded at 1.4961 towards its highest at 1.5083, before it resumed settling above 1.5035, where the upside momentum is still strong for the euro. The pair is currently trading below 1.5100 resistance and once the pair breaches that level we expect a strong upside rush and a continuation of the bullish move.
The negative pressures continue to be seen on sterling due to the prevailing economic weakness; despite of the reported improvement in the housing sector, still Dubai's lingering problem is still feared to continue worsening shadowing negatively on the prospects for the UK economy and the health of its fragile financial sector. Sterling is trading below 1.65 levels after it fell today from the highest set at 1.6591 to set the lowest at 1.6468. Continued trading below 1.6680 will keep the downside wave valid for the pair's trading today.
Traders now are heading towards the Japanese yen, yet with great reservations, due to fear of the materialization of intervention expectations. The dollar dropped versus the Japanese yen where the pair managed to decline from 87.03 to 85.84 where this decline was pressured by negative pressures upon the dollar following the gains in equities and commodities compensating the heavy endured losses by the end of last week.
We are waiting now for Canadian data from industrial to GDP figures, where the USDCAD pair is trading among the highest set today at 1.0618 and the lowest at 1.0532, while trading below 1.0660 will keep the downside wave valid though the data might increase the volatility today especially as expectations are for the Canadian economy to have expanded by 1.0% in the past quarter which shows that the recession might have found its bottom.