The dollar edged higher against the euro and Loonie in a quiet Monday session amid a dearth of economic data and Japan's market closed in observance of the Equinox holiday. Traders remain averse to risk with the EU Summit looming on Thursday and fears that Greece may turn to the IMF for aid in the event support from the European Union fails to materialize weighing on the single currency. Also on the agenda for later in the week will be the rescheduled Congressional testimony from Federal Reserve Chairman Ben Bernanke, which was postponed from February as a result of weather. Bernanke is expected to outline the Fed's policy strategy for exiting from its emergency lending facilities and will likely field questions over the FOMC's upcoming moves toward policy normalization. Heading into Thursday's Congressional testimony markets will focus on Fed speeches by San Francisco Fed President Yellen - speculated to be the next Vice Chairman, and by current Fed Vice Chairman Donald Kohn.
Housing market data will remain in focus this week with the release of existing home sales on Tuesday and new home sales later in the week. Existing home sales are seen down slightly in February to 5 million units while new home sales are estimated to increase to 320.0k units. The latest reports continue to suggest a slowdown in the deterioration of the housing market, paving the way for a gradual improvement in the second half of the year. Also due out this week will be durable goods orders, the Richmond Fed manufacturing index, building permits, the final reading for Q4 GDP and the March University of Michigan consumer confidence survey.
Greece Weighs on Euro
The prospects for Greece seeking aid from the International Monetary Fund upon failure for support to materialize this week from the EU summit continues to weigh on the euro. ECB President Trichet spoke earlier, stating that if assumptions that Greece will not be downgraded are too optimistic, the situation would need to be reevaluated. Trichet emphasized that any aid must provide an element of stabilization for the entire Eurozone and support would have to be attached to stringent conditions. He added that Greece obviously has a serious problem and in his view, a loan is the only possibility and that verbal discipline remains of utmost importance.
EURUSD recovered from some of its earlier losses, edging up back toward the 1.3560-mark. Resistance begins at 1.36, followed by 1.3640 and 1.3670. Subsequent ceilings will emerge around 1.37, backed by 1.3730 and 1.3765. On the downside, support starts at 1.3540, followed by 1.35 and 1.3450. Additional floors are seen at 1.34, backed by 1.3350 and 1.33.