The dollar fell following the release of disappointing U.S. weekly employment numbers, only a day before the release of the high impact non-farm payrolls report. The weak economic data serves as a reminder of the recent trend of disappointing economic reports stemming from the U.S. economy. Speculation of further easing in monetary policy by the Federal Reserve is also fueling weakness in the greenback.
Yesterday the EUR/USD rose to 1.3180, following an opening day price of 1.3146. The Cable was unchanged at 1.579. The yen continued to strengthen as the USD/JPY fell to 85.88 after opening yesterday's trading at 86.04.
A Wall Street Journal article outlined steps the Federal Reserve could take to increase quantitative easing in light of the recent downturn of the U.S. economy. The Fed is not expected to begin tightening interest rates until 2011 and may be searching for new ways to stimulate the struggling U.S. economy.
Today's release of the critical U.S. non-farm payrolls report will be the highlight of today's trading. The jobs data will provide more clarity to the extent of the U.S. economic recovery along with more speculation on just what the Fed will do next. Expectations are for a decline of 63K jobs for the month of July. Worse than expected results would show further deterioration in the U.S. economy and could send the dollar lower versus the major currencies. Resistance levels for the EUR/USD come in at 1.3270 followed by 1.3350.