The U.S. dollar broke the bearish trend it had been experiencing since early last month yesterday, following a speech by the Fed Chairman which led to gains for safe haven assets. The speech from Chairman Bernanke was unlike his more recent statements, in that it did not paint a solid picture of the global economic recovery. Following the speech, investors dumped riskier currencies in favor of the greenback.
Both the euro and British pound tumbled versus the dollar. EUR/USD has dropped over 100 pips over the last 24 hours, and currently stands at the 1.2768 mark. GBP/USD dropped close to 200 pips over the course of yesterday's trading session, before staging a slight comeback. At the moment, the pair is trading around the 1.5180 level.
While risk aversion appears to be the predominant market sentiment at the moment, investors will be cautiously awaiting several U.S. economic indicators set to be released today. At 12:30 GMT, the weekly U.S. unemployment figures are set to be released. With analysts predicting a slight increase in unemployment over last week, investors may continue to buy up safe haven assets in the afternoon, thereby boosting the dollar.
In addition, traders will also want to pay attention to the existing home sales report set to be released at 14:00 GMT. A decrease in home sales from last month is predicted, which if true will likely lead to further risk aversion. That being said, any unexpected increase in the home sales figure may lead to gains for the euro against the greenback.