Today has seen the dollar gain slightly against the euro, despite high Euro zone data and expectation of a quick recovery returning to trader's minds. The buck seems to be gaining on the back of poor economic estimates by the World Bank, which announced a 2.9% contraction in world economy. Stocks are down and the absence of important economic releases for the rest of the day may be used as consolidation and repositioning before the busy week ahead.

The EUR/USD found a temporary halt at 1.3930 and the move that started last week was not strong enough to take out the latter level. So far the pair is moving within tight ranges and only a break out of 1.38 or 1.40 may lead to something further. Germany's good news, the IFO showed a substantial increase for the third month, was not enough to spark a new rally on the pair and this being Monday, we may not see any big movements. The next level to watch is 1.3830 ahead of 1.3780.

The economic calendar had only the IFO out of Germany today, which printed yet another high number and traders are getting ready for important events this week, such as the FOMC meeting which will be crucial for the dollar€™s direction and market participants will monitor Bernanke's statement for signs of inflation worries and further economic recovery. The upcoming FED statement is important, as it is widely expected the bank will leave the interest rates unchanged. There has been speculation recently that the FED is ready to start hiking rates as early as September, as inflation may rise, however it has been made clear by several FED members that the bank is not looking to hike any time soon. This statement may give traders what they are looking for in terms of rates future, and the dollar will react accordingly.

Also this week we have Durable Orders and Existing Home Sales out of the US and many other releases out of UK and Europe to keep us going. The markets are looking for an excuse to rally further and if we see further weakness in the buck in the coming days, the oil may rise again too. For the time being, the oil is falling below $69 as the dollar is strengthening due to the latest predictions of the World Bank, making investors wary of the economic outlook. The reality is that market participants are in need of good news and positive sentiment towards an imminent economic recovery, that sometimes they are blinded by the better economic numbers that hit the wires, however when another set of bad news approaches, risk aversion still wins.

Let€™s see how today will progress and if New York will continue on the negative after its opening and if the buck can actually continue to gain over these pre-FOMC days. The dollar€™s strength feels temporary for now, as traders may want to start selling the buck as we approach the meeting and not to get caught on the wrong side of the market if Bernanke announces further measures to tackle the current economic situation, which could have negative effects on the dollar.