Comments yesterday from Fed Chairman Bernanke sent the dollar plummeting against most of its main currency rivals, including the euro and yen. Bernanke voiced concerns regarding the high level of unemployment in the US, which investors interpreted as a sign that the Fed will continue with its stimulus package. The EUR/USD spiked well over 100 pips yesterday, peaking at just above the 1.3740 level. Meanwhile, the USD/JPY fell close to 40 pips, dropping as low as 82.18 during the evening session.
The dollar was able to stage a minor recovery in the overnight session, largely because riskier currencies like the euro lack strong fundamental news to boost them to new highs against the greenback. The EUR/USD fell over 20 pips, and is currently on its way to dropping below the psychologically significant 1.3700 level. The USD/JPY shot up some 25 pips last night, and is currently trading at 82.55.
Today, dollar traders will want to keep a close watch on the latest US Unemployment Claims figure, set to be released at 13:30 GMT. Given Bernanke's comments yesterday, today's figure is likely to carry more weight than usual in the marketplace.
Analysts are currently forecasting the number to come in around 411K, which if true, would represent a drop over last week. Barring any surprises, the positive employment data will likely lead to some gains for the dollar in the afternoon session.