Monday, 15 Mar 2010

Dollar Rises After U.S. Debt Warning

Riskier assets fell during the European trading session after Moody's Investor Service warned the U.S., U.K., Germany, and France of a potential downgrade to their AAA credit ratings. This drove traders out of equities and into safe haven assets such as the dollar and the yen. Despite pending reports of a European resolution to bailout the EU member nation Greece, the euro came under pressure from the dollar.

At lunchtime, the EUR/USD was trading lower at 1.3725 from Friday's closing price of 1.3767. The EUR/JPY traded as low as 124.26 after opening trading this week at 124.67.

The market awaits the decision on the Greek debt bailout by fellow EU member nations Germany and France. Reports stipulate that Greece could receive loans in order to backstop the fiscally troubled nation. Any resolution to the Greek sovereign debt debacle could be a short term positive for the euro during today's trading.

Looking ahead to the U.S. trading session, traders will be focusing on the release of the TIC Long-Term Purchases report. The data release is scheduled to be published at 13:00 GMT and should dictate the direction of the major crosses. A result above market expectations of 50.3B should support the greenback. The next major support line for the EUR/USD rests at 1.3675.