Monday, 7 Sep 2009

The Dollar is on Defensive, EUR Gains after G20 Meeting

It appears that the first week of September held a few surprises for many forex traders. US Non-Farm Payrolls came out slightly better-than-expected, but the Dollar took a dive in last Friday's final trading hours. Today, banks in the US and Canada are on holiday, celebrating Labor Day, which means market liquidity will be low. This environment usually helps current trends maintain themselves, which highlights the notion of a sustained downtrend for the Dollar.

The U.S Dollar also weakened after a G20 pledged to keep the economic stimulus packages in place. It in fact the greenback lost ground vs.12 of its major counterparts as another survey showed German Factory Orders have added another 3.5% in August after rising 4.5% in July. This positive economic outlook from the European markets is causing more risk-taking, supporting the EUR and hence weakening the Dollar. Additional positive European economic data would further enhance the trend, probably bringing the USD to the 1.4450 price-level during the day. On the other hand, In view of the U.S. Bank Holiday, a breach of this resistance level seems quite unlikely. Traders therefore should be prepared for a continuation of the range trading throughout the US trading session.