The Dollar rallied during the first full trading day following the release of the European Financial Stability Plan. Investor sentiment rallied across most trading markets after the EU announced a $1 trillion bailout plan consisting of loan guarantees and emergency funds. The show of strength by the EU/IMF bailout package is an attempt by the EU to the markets the extent that the EU will go to in order to defend the euro.
During volatile trading conditions throughout the day, the EUR/USD finished at 1.2755 from an opening price of 1.2945. The pair failed to hold its gains that it made during the Asian trading sessions, falling towards its Friday's close at the end of New York trading. The Dollar also traded higher versus the JPY. The USD/JPY closed at 93.14 after beginning the day at 92.59.
Looking ahead to today's trading session, the Dollar could once again be influenced by the developments in Europe. This may be due to a lack of U.S. economic data releases. Despite the sheer size of the EU bailout package, market sentiment continues to be Dollar positive and the Dollar could continue to strengthen. The next support level for the EUR/USD rests at the price of 1.2675.