The U.S. dollar advanced today against other major currencies amid rising jitters and woes in middle of the general pessimism which returned to dominate markets, especially after inflation climbed in the euro zone while unemployment lingered at high levels, reflecting worse economic conditions and spreading pessimism through currency and stock markets.
The euro zone released the consumer price index annual flash estimate for September, where inflation rallied to 3.0% form 2.5%, adding more pressures on the European central bank, especially after expectations in the market pointed at the possibility of cutting rates by 0.5% in the next meeting; however, rising inflation could force the Bank to stand still in order to control rising inflation along with supporting growth and recovery.
The euro zone also released the unemployment rate for August, where unemployment lingered at 10.0% in line with expectations which kept the downside pressure on the euro evident.
The U.S. dollar returns to trade higher today after the losses seen in the past session, forcing downside pressures on other major currencies and commodities, where we can see greenback gained strength against the euro, the sterling pound, the yen, Swiss franc and Canadian dollar.
The U.S. dollar index (USDIX) rebounded sharply to the upside after opening the session today at 77.86, recording a high of 78.42 and a low of 77.82, and is currently hovering around 78.34.
On the other hand, the EUR/USD pair declined sharply after opening the session at 1.3596, setting the highest at 1.3600 and the lowest at 1.3475, and trades now around 1.3494.
Technically speaking, the pair is very volatile and fluctuates heavily today; therefore neutrality is favorable, where consolidation below 1.3515 could trigger a test of levels between 1.3400-30 at least, while stability above 1.3515-25 could support the positivity to return.
Concerning the GBP/USD, the pair opened the session at 1.5624, and then inclined to a high of 1.5627; however, the pair reversed to the downside as the strengthening dollar supported the pound to lose strength, where the pair is currently trading at 1.5566 after reaching a low of 1.5540.
Moreover, the USD/CAD pair inclined sharply today after opening the session at 1.0362 ahead of the gross domestic product figures from Canada. The pair reached the highest at 1.0463 and the lowest at 1.0350 and is trading now around 1.0455.