The week has come to an end, with dollar strong across the board and especially the euro, as the pair fell below important 1.40, amid renewed worries about the state of global economy and the so called recovery. Stocks fell yesterday in New York, more than 200 points and Asia followed on the same note. The European markets are trading mixed so far, and Trichet€™s rhetoric yesterday did not provide any reasons for investors to keep buying the single currency, as he said that the bank will keep rates at those levels for a long period of time due to economic instability in the Euro area.
The EUR/USD is trading lower, since yesterday€™s payroll numbers suggested that the employment sector in US is still suffering and may continue to do so for the time being, which made investors think twice about buying riskier assets. The pair saw choppy action before and after the news, however towards New York close, the pair settled for the downside, from 1.41 down to 1.40 and this morning the latter level gave way towards important 1.3930.As long as the latter level holds for now, there may be further upside towards 1.4060, however traders may choose to sell the pair as liquidity may be thin due to US markets being closed. Levels to watch for now, are 1.4060 on the upside and a clear break could lead to further gains towards 1.4130.
The economic calendar is almost empty today, with only important news out of UK, being the Services PMI, which came out better than expected but not providing any reaction for the pound, as market participants are either making plans for the weekend or are already celebrating the US 4th of July away from their desks.
The ECB meeting came and gone, with Trichet implying that rates are appropriate for now at current low levels, as Euro zone economy still struggles with recession and unemployment is reaching new highs by the week. The euro is stalling for now, as economic data are not improving consistently and at the end of the day, although conditions are dismal in the US also, the dollar is always preferred in times of crisis.
Let€™s see how the markets will close for the week and if current realization that recovery may be a long and painful process, will affect the global markets to the extend of another downside in the coming week. An important event next week will be the G8 which potentially could provide a lot of liquidity in global markets and especially the currencies, as crucial matters will be discussed and the dollar€™s value may be mentioned once again€¦