The U.S dollar fell against most of its major currencies on Monday, hitting its lowest level in nearly two-months against the EUR, as gains in stocks prompted investors to wade into riskier currency trades. By yesterday's close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.3650. The dollar experienced similar behavior against the CHF and closed at 0.9490.
The U.S. dollar had already been under pressure on expectations the U.S. Federal Reserve would not rush to raise its interest rates and on the growing view that the greenback has become a funding currency for carry trades. In addition, analysts attributed the fall in the dollar, which has been treated as a lower risk and safe-haven investment, to growing optimism that the worst of the financial crisis has passed. This has caused investors to buy higher-yielding currencies which rallied earlier this month.
Looking ahead to today, the most important economic indicator in today's trading is the Consumer Confidence around 15:00 GMT. This report is very important and is likely to generate dollar volatility. Traders should pay close attention to the market as there will likely be several opportunities for traders to capitalize on the market fluctuations which are likely to follow this release.