USD Rebounds Ahead Of Bernanke, Euro At Risk Of Bearish Breakdown

Text goes here

In this Issue...

Get up to date - Breaking News

Read what our Top Contributors are saying

By David Song, DailyFX Currency Analyst

Talking Points

U.S. Dollar: Upward Trend Remains Intact, Chairman Ben Bernanke On Tap

Euro: Threatens Range as ECB Lending Hits Record-High For Portugal

U.S. Dollar: Upward Trend Remains Intact, Chairman Ben Bernanke On Tap:

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR)pared the decline from Friday's dismal Non-Farm Payrolls report, and we should see the greenback track higher throughout the day as market participants scale back their appetite for risk. As equity futures foreshadow a lower open for the U.S. market, the shift away from risk-taking behavior should spark increased demands for the reserve currency, and we may see FX traders become increasingly bullish against the USD should Fed Chairman Ben Bernanke continue to soften his dovish tone for monetary policy. Although the 120K rise in NFPs fell short of market expectations, we should see Chairman Bernanke continue to talk down speculation for another large-scale asset purchase program as central bank officials expect the economic recovery to get on a more sustainable path this year. In turn, we should see the USDOLLAR maintain the upward trend from earlier this year, and we anticipate to see another run at the 78.6% Fibonacci retracement around 10,118 as the central bank looks to conclude its easing cycle in 2012.

Euro:Threatens Range as ECB Lending Hits Record-High For Portugal:

The Euro extended the decline from the previous week to hit a fresh monthly low of 1.3032, and the bearish sentiment underlining the single currency should continue to gather pace as the fundamental outlook for the region turns increasingly bleak. Indeed, a report by the Bank of Portugal showed commercial banks tapped a record EUR 56.3B from the European Central Bank, and the heightening risk for contagion may ultimately produce a bearish breakdown in the EURUSD as it threatens the range carried over from the previous month. As the EURUSD carves out a lower top coming into April, we are looking for a break and a close below 1.3200 to favor a move back towards the 23.6% Fib from the 2009 high to the 2010 low around 1.2630-50, and we may see the pair trade heavy throughout the course of the year as European policy makers struggle to stem the risk for contagion.

--- Written by David Song, DailyFX Currency Analyst

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Any opinions, news, research, analyses, prices, or other information contained in this email are provided as general market commentary, and do not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The content in this email is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. Dailyfx has taken reasonable measures to ensure the accuracy of the information, however, does not guarantee its accuracy, and will not accept liability for any loss or damage which may arise directly or indirectly from the content or your inability to access the content, for any delay in or failure of the transmission or the receipt of any instruction or notifications sent through this email. Please read the full disclosures here. Additionally, Dailyfx takes your privacy seriously. Please click here to read our privacy policy.

Valuable Resources