The dollar continued to lose ground against its major counterparts yesterday, however today traders are a bit wary of selling the currency further amid Bernanke€™s testimony in front of the House later today. The FED Chairman will €œbare all€ in front of the representatives and explain the current economic situation step by step. It is more than likely that the government officials will grill him once again about the €œexit€ plan out of the recession and also the ever so growing inflation danger which may arise sooner rather than later. The markets are more confident these days, mainly due to better earning s reports from Banks and corporations and there is a nice feeling in the air that markets are close to a bottom than ever before.

The EUR/USD is heading towards 1.43 and as long as 1.4130 holds for now, there is further upside to be seeing towards 1.4360. In the daily charts, the pair needs to take out 1, 4260 and until that happens, it is possible to see consolidation towards 1.41.

The economic calendar is almost empty today from important releases, apart from Bank of Canada€™s rate decision which is expected to be unchanged. The Canadian dollar seems to be stronger these days, amid dollar weakness and also risk appetite which helps investors buy the commodity currencies as alternative assets. The USD/CAD is at very important support levels for now, and if 1.0980 breaks, then next target in the daily and weekly charts seem to be 1.0700. It will be interesting to see what will happen after the rate decision today and if BOC signals that due to better economic conditions in Canada, rates could rise in the coming weeks.

All eyes and ears will be at Mr. Bernanke today as he will do his testimony in front of the House and once again markets will take his words in order to see what the next step is. The current market euphoria seems to be ongoing, and DOW JONES seems to be at important resistance levels. The question is if the gains we saw in the recent days will have an expiration day once again, or if markets are ready to take them to another level. If Bernanke and co signals that recovery is indeed underway and the stimulus plans helped, investors may start to be less wary of another market crash and concentrate on the upside once again.

I personally think that the coming months towards the end of the year will show us what the bigger picture will be and if we are on the way to put all this current mess behind. Most of the major economies in the world have shown signs of improvement; however the economic conditions need to be better on a weekly basis. Lets not forget that it is the €œhidden€ dangers that we fear the most in times of recession and therefore we need to €œhandle€ the markets with care until the confidence comes back to stay€¦