Heavy fluctuations dominated the currency markets today, where the U.S. dollar dropped in earlier trading this morning before it was able to rebound against its major counterparts, as despite the lack of fundamentals released from the United States, markets moved heavily after China announced it will allow the Yuan to be more flexible in trading against the U.S. dollar.
Meanwhile, investors are still worried over the outlook for Europe, where several European nations are struggling with their huge budget deficits, while ECB chairman Trichet signaled today in a testimony before the Parliament Committee for Fiscal and Monetary Policy that inflationary pressures in the Euro Zone area are still under control, while that the ECB is planning on withdrawing the extraordinary measures taken earlier, and Trichet also signaled that the bond purchase program will be able to help bring calm to financial markets.
Meanwhile, the U.S. dollar index inclined today on daily basis, where the index was trading at 85.78, while recording a high of 85.82, compared with the opening level at 85.35, while recording a low of 85.09.
The Euro/Dollar pair declined on daily basis, where the pair is trading at $1.2336 after it breached the support level at $1.2360 which is now a resistance for the pair, and the pair is now settling above the support level at $1.2330, noting that the pair might drop below this level given the strong downside direction that is controlling the pair at the moment as seen on the four and one hour chars. The pair recorded the highest level today at $1.2468 and the lowest at $1.2325.
The Pound/Dollar pair also declined to trade at $1.4790 above the support level witnessed at $1.4770, while the pair is facing a resistance level at $1.4850, the pair managed to set the highest level today at $1.4935 while recording a low of $1.4783, yet the pair is showing downside signals as shown on the four hour chars.
Finally, the Dollar/Yen pair inclined in today's trading, where the pair continued to fluctuate between the support level at 90.60 and the resistance level at 91.45, noting that the pair managed to set the highest level today at 91.47 and the lowest at 90.21, however, the pair is pointing to a downside direction on intraday basis as shown on the stochastic indicator on the four hour chars.