The Euro extends rally today with support from solid employment data from Germany and improving confidence in Eurozone. Germ! any unemployment rate dropped to 7.6% in July, hitting the lowest level since November 2008. Economic confidence rose to a two year high of 101.3 in July versus expectation of 99. Industrial confidence and services confidence also improved more than expected to -4 and 6 respectively while consumer confidence was unchanged at -14. Additionally, dollar is pressure as a Moody's analysts is quoted saying that US's credit rating would need to be reviewed if the current projections for debt are realized. The short term bias in EUR/USD has turned neutral since its unable to break fast 1.3120 levels. While another rise could still be seen, we'd continue to look for reversal signal as EUR/USD approaches cluster level of 1.3105/3123 (38.2% retracement of 1.5143 to 1.1875 at 1.3123) . On the downside, break of 1.2731 will indicate that EUR/USD has topped out and target 1.2450 support zone first. The increasing risk appetite and poor data from US has led to these gigantic moves in euro! . Whether the long term trend has changed still needs to be co! nfirmed. (EURUSD - 1.3050). Neutral

Gbp is moving in a bullish channel pattern from last few weeks and buying on dips strategy has paid all the way but Wednesday's testimony by the Bank of England MPC members to the Treasury Select Committee highlighted the wide range of views about the risks surrounding the UK economic outlook. One of the risks is the renewed weakness in the housing market as one of the reasons why any discussion of policy tightening is far too premature and further easing may yet be required to assure that growth momentum is sustained. The charts of Gbp seems to be highly overbought and ripe for a major correction. Stay cautious. (GBPUSD 1.5620). (Neutral)

The Yen was broadly weaker last couple of sessions the market pushed higher on USD/JPY due to continuous risk flow in the markets across. USDJPY is currently trading at 87.16 levels. We have seen an up move due to increased risk appetite. Overall the bullishness in yen has still not! changed and bias of the pair is bearish. (USDJPY 86.47) Neutral

The AUD is currently trading at 0.8990 levels and touched high at 0.9069 couple of days back. Any type of news signifying downward growth concerns for the emerging economies like China would seriously weigh down the currency. Immediate support at 0.8880 area. (AUDUSD - 0.8990). Neutral to Bullish

Gold is currently trading at 1168 levels and does not seem to be very bullish now. It is holding below its important moving averages of 55 day in daily charts. Most likely target could be 1110 dollars in case we see 2-3 of closing below 1170 dollar . Please note that risk will remain heavily on the downside as 1266.5 resistance holds, and we'd expect another decline sooner or later. Selling on upticks is recommended.(Gold— 1169).

The Dollar index drops sharply to as low as 81.53 so far today, as pressured by both Euro and Yen. The current decline from 88.70 is treated as a cor! rection to medium term rally from 74.19. We'd stay bearish wit! h 83.45 resistance intact and extend the current fall to extend towards 80.04, which is close to 80 psychological level as well as 61.8% retracement at 79.73. Hence, the greenback would continue to be soft for a while in general. Nevertheless, downside should be contained there to conclude the correction and bring rebound. Break of 83.45 will indicate that dollar index has bottomed and should then bring strong rebound towards 85.09/86.42 resistance zone. (Dollar Index– 81.53) Neutral