The dollar continued to lose ground against the euro and other major currencies since early European session and it looks good for further loses, as confidence has returned in the markets slowly. Yesterday, Alan Greenspan, the ex- FED president, indicated that the market bottom may be nearing and the way to recovery may be coming earlier than first thought.
The EUR/USD found a good support at 1.3530 for now and all the retracement s we saw so far, did not manage to take out the latter level. However, if we want to talk about further upside, we need to see 1.3730 and 1.3780 giving way sooner rather than later. Next important resistance level now is 1.3830€¦
The economic calendar has a few important releases today out of UK, with King€™s testimony at the time of writing and also inflation report. King has indicated so far that the economic growth may need to be downgraded and more money may need to be put in the system in order to have some result soon. The inflation report will be very important for the pound€™s short term future, as it is the first indication after the quantative easing that BOE has adopted. The fact that Chancellor Darling gave false predictions for economic growth in the past weeks is making the UK government so far to look unreliable and uncertain about its future. The pound so far is losing ground against the greenback and GBP/USD found a top at 1.5330 Next level to watch for the pair will be important support at 1.5230 which if breaks more downside may be see towards 1.51.
Later on, we have US retail sales, which are expected to show signs of recovery since previous months and it will be interesting to see how it will be played out in stocks and the dollar.
Things to watch for now, will be euro€™s new found strength and if the pair continues its upside move and EUR/GBP which trades much higher since early morning, as European economy seems to be in better condition than UK, and that is obvious on the pairs new found strength.
Let€™s see how stocks will perform after New York open and if we have another rally which this time lasts until the end of the week€¦