The dollar outlook continues to be gloomy, what with EUR/USD breaking higher from important 1.4160 and GBP/USD skyrocketing more than 300 points towards 1.65 which is a very good resistance level for now. Investors are clearly happier about the global economic outlook and they don€™t feel the need to buy the buck as a safe haven currency, hence the recent weakness. The more the economic numbers continue to pleasantly surprise, the less traders feel obligated to buy the greenback.

The EUR/USD is trading heavily since market opening, with pair breaking important levels on its upside journey towards 1.43. For now next level to watch will be 1.4260 and a clear break may give euro bulls€™ further excuse to take the pair towards 1.4330. The new found euro strength will be put to the test on those levels though and the fact that the ECB is deciding on its rates outlook later on this week, may stop traders from taking the euro too high as the risk of a split between ECB members is always likely to put some pressure on the euro outlook.

The economic calendar had a few releases today, with Manufacturing PMI out of UK which gave us better numbers hence the pounds new found strength and also ISM Manufacturing out of US later on which is expected to improve. The numbers we get out of UK recently have been much better and therefore traders have started to feel that really the worse is behind and there is a big possibility that recovery has already started. This gives the pound some kind of leverage for now and 1.65 seems to be the next test for the currency. Investors have been short the pound for too long in the previous months and if we get further good news for the economy, we may be in for another rally in all pound related pairs in the coming weeks.

This week is crucial for the dollar and other markets, what with so many economic indicators looming and ECB and BOE rate decisions out later on. The main event that traders await though is once again the nonfarm payroll data which will be very telling on what is going on in the US economy recently. The market sentiment is positive again and that can be seen clearly on stocks and equities direction and also the oil which is climbing slowly towards $70. If the number indicates that recovery is almost certain then the dollar may continue to lose steam as the risk appetite is growing by the day and investors are looking elsewhere for other €œinteresting€ ventures.

Let€™s see how New York opens and if the start of the week indicates that the upside is back to stay for now€¦