During early Asian deals on Wednesday, the US dollar showed strength against its European majors. The dollar thus reached a 2-day high against the euro. On the other hand, the greenback declined from near a 4-week high against the Japanese yen.

U.S., stocks moved higher throughout much of the trading session yesterday, although the major averages gave back some ground going into the close. The strength in the markets came as traders used the weakness in the two previous sessions as a buying opportunity.

The Dow closed up 86.90 points or 1.2 percent at 7,608.92, the Nasdaq closed up 26.79 points or 1.8 percent at 1,528.59 and the S&P 500 closed up 10.34 points or 1.3 percent at 797.87.

Weak economic data released yesterday helped to limit the upside for the markets, with a report from Standard and Poor's showing that home prices fell at a record annual rate in January.

The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index for January fell 19.0 percent compared to the same month a year ago, reflecting an acceleration from a revised 18.6 percent year-over-year decline in December.

Separately, the Institute for Supply Management - Chicago said its index of activity in the Chicago-area manufacturing sector fell to 31.4 in March from 34.2 in February, with a reading below 50 indicating a contraction in the sector.

Meanwhile, the Conference Board's consumer confidence index edged up to 26.0 in March from a record low reading of 25.3 in February, although economists had been expecting a somewhat more significant increase by the index to a reading of 28.0.

Against the European currency, the US dollar traded higher during early deals on Wednesday. At 8:55 pm ET, the dollar reached a 2-day high of 1.3175 against the euro, compared to 1.3252 hit late New York Tuesday. The dollar is currently trading at 1.3214 against the euro with 1.295 seen as the next target level.

The US dollar that closed Tuesday's North American session at 1.4325 against the British pound climbed to 1.4284 at 8:55 pm Eastern time. The next upside target level for the US currency is seen around 1.41. The pound-dollar pair is currently quoted at 1.4300.

Against the Swiss franc, the US currency edged higher during Wednesday's early deals. At 8:55 pm ET, the dollar-franc pair hit 1.1445, up from Tuesday's closing value of 1.1397. If the pair gains further, 1.155 is seen as the next target level. The pair is currently quoted at 1.1429.

The US dollar lost ground after trading near a 4-week high of 99.48 against the Japanese yen during today's early Asian deals. The dollar-yen pair that closed Tuesday's New York deals at 98.99 slipped to 98.24 at 8:00 pm ET. On the downside, 96.9 is seen as the next target level. The pair is presently trading at 98.67.

The Bank of Japan's Tankan Survey report revealed that the sentiment among Japan's large manufacturers plummeted at a record rate in the first quarter of 2009, posting a score of -58. That was worse than analyst expectations for -55 following a score of -24 in the previous quarter. It was also worse than the previous record low of -57 in 1975. The large manufacturers' outlook for the June quarter came in at -51.

Traders now look forward to the German retail sales and the euro-zone jobless rate-both for February and the manufacturing PMI reports from major European economies for March in the upcoming session.

Across the Atlantic, the ADP National Employment report, which sheds light on non-farm private employment, is scheduled to be released at 8:15 AM ET.

The results of the manufacturing survey of the Institute for Supply Management are due out at 10 AM ET. Economists expect the index to show a reading of 36 for March.

The Commerce Department's construction spending report to be released at 10 AM ET is expected to show a 1.6% decline in spending for February.

Data on Pending Home Sales, which is a leading indicator of housing market activity released by the National Association of Realtors, is due out at 10 AM ET. The index is likely to show a 2% decline for February.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 AM ET.

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