The U.S. dollar saw a sharp bearish trend against its major currency rivals during last week's trading session. The dollar dropped more than 550 pips vs. the euro, and the EUR/USD rose above the 1.3400 level. The dollar saw a sharp decline against the British pound as well, and the GBP/USD pair gained about 400 pips.
The dollar tumbled last week after reports showed that the U.S. economy is recovering at a slower pace than previously estimated. Initial Jobless Claims in the U.S. rose last week for the first time since November. The number of first-time claims for unemployment benefits jumped in the first week of 2011 by 35,000 to 445,000 individuals, well above expectations for 405,000 claims.
The U.S. Preliminary Consumer Sentiment survey unexpectedly fell in January. The Thomson Reuters/University of Michigan index of consumer sentiment dropped to 72.7 from 74.5 a month earlier. The index failed to reach projections of 75.5, indicating that U.S. consumers still lack confidence regarding their financial outlook.
As for the week ahead, many interesting economic releases are expected from the U.S. Traders are advised to focus on the Long-Term Purchases, Building Permits, weekly Unemployment Claims, Existing Home Sales and the Philadelphia Manufacturing Index. If the end results of the reports will provide disappointing data as well, investors will see it as another indication that the economy is sluggish, and the greenback might see further bearishness as a result. Traders should note that U.S. banks will be closed today in observance of Martin Luther King Day.