A day ahead of the ECB and BOE rate decisions, the European common currency gained some momentum as speculation rose among investors that tomorrow's rate decision will hold future plans to constrain the debt problems of the European continent. The ECB and BOE are projected to preserve the record low rates held by both banks on overnight loans, currently set in the ECB at 1.00% and at BoE at 0.50%. Meanwhile, the yen dropped against most of its major peers on speculation that the global economic recovery might pressure BoJ to raise interest rates in order to control the country's inflation levels. Moreover, Fed's chairman, Ben Bernanke testified before the House Budget Committee where he stated that economic recovery is still intact, while the labor sector might constrain economic growth and force the economy to recover over a Modest Pace. The remarks forced the dollar to depreciate against most of its major counterparts, providing the euro with enough momentum to rise, in addition to stocks as investors sought risky investments. Gold retreated as investors locked in their gains while the inverse relationship between commodities and the greenback led oil to rise throughout today's trading.
The U.S. Dollar index, which tracks the performance of the dollar against a basket of currencies, dropped on the daily scale where the index opened today's trading at 88.25, while currently the index is trading at 87.61, where it managed to reach the highest for today at 88.39 and the lowest at 87.40.
As for trading, the euro-dollar pair traded higher at $1.2036 compared with the opening levels of $1.1971, where it managed to reach the highest levels today at $1.2073 and the lowest at $1.1922. As the pair managed to obtain a four-hour closing above $1.1995, a bullish trend is projected with targets at $1.2085, but failing to breach the resistance at $1.2040 would pressure the pair to descend further to target $1.1900 levels.
Moving to the Royal currency, the GBP/USD pair appreciated on the daily scale to trade at $1.4567, compared with the opening levels of $1.4467, where it managed to reach the highest levels today at $1.4606 and the lowest at $1.4393. As the pair managed to obtain a four-hour closing above $1.4560, resistance levels at $1.4576 are preventing the pair from rising further to its target at $1.4609, accordingly, the pair is currently declining on the four-hour chart in order to retest the previously breached levels at $1.4560 in order to drop further towards $1.4500 and build a base for a bearish pattern that would lead the pair to its target at $1.4395.
Finally talking about the dollar's performance against the Yen, the USD/JPY pair traded slightly lower from the opening levels of 91.45 as it's currently trading at 91.36, the pair managed to reach the highest levels today at 91.66 and the lowest at 91.23. The pair is nearing the support level for the minor ascending channel at 91.10. This level is required to be breached in order to insure the expected bearish intraday direction for today with targets at 88.60 levels, keeping in mind that a breach of 92.90 level to the upside will discard those expectations.