The Dollar rallied against the Euro yesterday, gaining over 200 pips. The EUR/USD pair reached a 9-month low as a result, dropping to the 1.3670 level. The Dollar also gained about 200 pips vs. the Pound today, marking an extremely bullish session.
The Dollar's bullish trend continued yesterday. It appears that the risk-aversion is currently dominating the market, as the Dollar seems to surge regardless of the data published from the U.S. economy. Over the last two weeks the Dollar rose due to an improving housing sector, a halt in unemployment growth and rising inflation. However today, the Dollar rallied following a batch of disappointing data, including worse than expected employment figures. The weekly Unemployment Claims rose by 8,000 during the past week to 480,000 people who filed for unemployment insurance for the first time during the past week. Currently the Dollar's bullish momentum seems be quite solid, and somewhat immune to negative data.
Nevertheless, today's trading session can put a stop to the bullish trend or significantly extend it. Today is the first Friday of the month, and as such the U.S. Non-Farm Employment Change report is expected. Analysts forecast that today's publication will provide the first positive figures since January of 2008. This will be yet another strong indication that the U.S. economy is recovering at a faster pace than expected. This has potential to boost the Dollar once again today against the major currencies, especially the Euro and the Pound. However, an unexpected negative end result could initiate a reversal in the market, and forex traders should be prepared for harsh volatility today.