The last few days have been a wild ride for the dollar and other major currencies, with EUR/USD making another attempt towards 1.40 and GBP/USD failing to break above 1.64, amid worse than expected retail sales earlier today. The investors were monitoring inflationary numbers out of US yesterday in order to assess what the next move by the FED will be in the coming weeks. The fact that the CPI data were well elevated made the dollar weak against its major counterparts as speculations for future hikes start to fade. Bernanke and co are contemplating if next week the FOMC statement should put an end to recent rumors that FED will hike next time.

The EUR/USD is trading heavily since beginning of the week and so far the pair is trading within its ranges of 1.38-1.40. The euro is much stronger today against the dollar and the pound and that can be seen easily in EUR/GBP which has gained more than 100 points since early session. Next stop for EUR/USD is 1.4030 ahead of 1.40 and euro bulls need to clear the latter levels before further upside occurs towards 1.4080.

The economic calendar has a few releases today, with UK retail sales coming out worse than expected, giving a nasty surprise to the pound and together with Kings Speech that economic recovery is €œsluggish€ as the banks suffer still, made investors think twice about buying the pound against the buck and the euro. Also today we have jobless claims out of US which will be interesting to see what the number will be, as recent employment data suggested that the recovery has started.

It is amazing how emotions are running high and low these days all across trader€™s desks, and the ups and downs we see in stocks and equities are the result of an ever growing confusion as to what the direction is. The US government is trying hard to promote economic stability and to convince consumers to go and spend in order to revive the economy; however it is so clear that things are far from rosy in various economic sectors as the numbers although better, are not consistent. In order to talk about a true recovery, we need to see the employment sector making remarkable progress and by that it means that the unemployment rate is not in multi years highs like it is at present.

The stocks are down so far in Europe and it will be interesting to see how they react after New York open. The risk aversion still comes back in and will continue to do so for now. Watch out the yen which made a comeback today against its major currencies, as risk appetite is fading over new concerns of how solid and real is the recent economic recovery€¦