Dollar Starts the New Year Down

By IBTimes Staff Reporter | January 05 2010 3:13 AM

The U.S. dollar fell during the first day of trading in the new decade after the release of manufacturing data from the U.S. Institute of Supply Management. This shows the manufacturing sector grew during the month of December for the fifth consecutive month, suggesting the U.S. economy may be emerging from the recession.

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The EUR/USD climbed to a high today of 1.4455. The pair was unable to hold the gains above the significant 1.4450 resistance level; however, the pair is not trading far from this mark in the morning hours of today's Japanese trading session. Yesterday the pair opened at 1.4289.

Interestingly enough, we saw the dollar falling today against the EUR as positive economic data from the U.S. was released. The EUR/USD traded in this type of fashion for most of the previous year as traders would take on more risky, higher yielding assets with improved economic data from the U.S. This trend was reversed during the month of December, particularly after the release of the surprisingly better than expected November Non-Farm Payrolls. As of this release the pair fell on good U.S. economic data. Could we be looking at a return of the major trend, a rising EUR/USD on good U.S. economic results? If so, the EUR/USD may see some appreciation in the New Year as the U.S. economy is showing signs of improvement

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