The dollar rallied in the markets especially after U.S. Vice President Joe Biden said that the government stimulus packages might take almost 18 months to start improving economic conditions, and this meant that pessimism once again approached the markets therefore increasing demand for lower yielding assets as a refuge against the global recession which was the reason that boosted the dollar in the markets versus major currencies.
As investors bought the dollar and sold the higher yielding currencies, weighed on the euro heavily as we see currently that the pair is depreciating as they trade at 1.3907 while recording a high of 1.4015 and a low of 1.3894. The euro also fell heavily after the International Monetary Fund (IMF) is suggesting programs that will support nearly 10 Eastern European governments and this showed that there is still weakness in economies. For the EUR/USD pair we see there is a support at 1.3865 and a resistance at 1.3973.
Now looking at the pound versus dollar pair we see that they are trading at 1.6262 between the support of 1.6197 and the resistance of 1.6303 while recording a high of 1.6332 and a low of 1.6253. The momentum indicators on the four-hour charts are providing us with a downside trend as investors are panicking selling the higher yielding currencies as they are trying to avoid any type of risk at a time of global downturn, and this meant that the pound was also depreciating against the federal currency.
We are also seeing in the markets unwinding of carry trades as investors are selling major currencies versus the yen which weakened the dollar against the Japanese currency. The pair is being traded at 92.65 while recording a high of 93.19 and a low of 92.48.