The buck started the day positively on Monday amid concerns of snap elections in Ireland however, this early rise was short lived and the index was soon back under the cosh. The buck got hit from all sides as rising equities in Europe and the US boosted sentiment and the euro, Treasury prices recovered pressuring the dollar and focus moved to the first sale of the bonds by the EFSF. The greenback remained around daily lows throughout the US session as US stocks extended gains on the back of M&A chatter and more solid corporate earnings, the Dow ended up notching its first triple-digit gain for 2011. Risk appetite remained decent in the over-night session with Asian markets responding well to strength on US bourses, keeping the euro well bid.

The greenback’s southern journey looks set to continue for a while still until an inflection point of sorts is met. In the index that is around the 2010 lows near 76.00 and in the euro around the 1.4000 mark. Both these levels are some ways off where we are trading now and as such further declines for the buck are likely. We are also beginning to hear chatter that some analysts now expect the ECB to raise rates ahead of the BoJ or Fed, while we don’t agree with these comments such expectations are likely to boost interest in the euro.