Yesterday, the USD fell to a record low vs. the EUR on expectations that the Fed will cut Interest Rates aggressively, despite stubborn inflation. Momentum in the EUR/USD pushed the pair through the closely watched 1.50 level and quickly surpassed 1.51 in the same session. The U.S. currency traded at the 1.5108 level vs. the EUR at 12:45 p.m. in Tokyo, after earlier touching the 1.5144 level.
The greenback retreated after Bernanke said that the Fed will act in a timely manner to support growth and to provide adequate insurance against downside risks. The Fed has lowered benchmark overnight interest rates to 3% from 5.25% since September and financial markets expect policy makers to lower them by a further 0.5 percentage point at their next meeting on March 18.
Meanwhile, the bad news out of the U.S. continued to mount. Data out yesterday revealed that Durable Goods Orders fell 5.3% in January, the most in 5 months, compared with the 4% forecast. The report added fears of a U.S. economic slowdown at a time when rising Oil prices are pushing prices higher, leaving the Fed with the dilemma of whether growth or inflation is potentially the bigger problem.
Looking ahead to today's U.S. calendar, the Preliminary GDP results will be released at 13:30 GMT, along with Unemployment Claims data for the month of January.
Volatility will likely continue across domestic financial markets as today's fundamental data holds potential to drive sharp moves in the U.S. currency. The USD will probably trade around its record lows against the EUR during the day and may even record new lows as the week progresses. Look for new lows and technical trends as opportunities for profits.
The greenback retreated after Bernanke said that the Fed will act in a timely manner to support growth and to provide adequate insurance against downside risks. The Fed has lowered benchmark overnight interest rates to 3% from 5.25% since September and financial markets expect policy makers to lower them by a further 0.5 percentage point at their next meeting on March 18.
Meanwhile, the bad news out of the U.S. continued to mount. Data out yesterday revealed that Durable Goods Orders fell 5.3% in January, the most in 5 months, compared with the 4% forecast. The report added fears of a U.S. economic slowdown at a time when rising Oil prices are pushing prices higher, leaving the Fed with the dilemma of whether growth or inflation is potentially the bigger problem.
Looking ahead to today's U.S. calendar, the Preliminary GDP results will be released at 13:30 GMT, along with Unemployment Claims data for the month of January.
Volatility will likely continue across domestic financial markets as today's fundamental data holds potential to drive sharp moves in the U.S. currency. The USD will probably trade around its record lows against the EUR during the day and may even record new lows as the week progresses. Look for new lows and technical trends as opportunities for profits.
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