Now that the holidays are over and the New Year past, trading desks are beginning to operate close to full staff and trading is beginning to behave as normal. The large price jumps that were seen during holiday hours have given way to systematic price movements driven by market events.
Yesterday the Dollar rose across the board, posting gains in almost all major pairs. A potential $300 billion tax cut that includes business incentives proposed by the incoming Obama administration sparked hefty gains for the Dollar. The new economic package could provide a much needed spark for the U.S. economy.
Today's gains continue a rally for the Dollar that started at the beginning of trading for the New Year. The EUR/USD touched at its lowest level since December 15th, at one point in the day falling to 1.3545. The rally of the Dollar may continue as negative economic pressure may weigh on EUR. The Euro-Zone economy is slipping into a recession and traders feel there may be room for further easing of Interest Rate policy in Europe. With this in mind, the Dollar may see more gains as the week goes on, possibly to the 1.3350 level.