Monday, 20 Jul 2009

USD Continues to Drop on Positive Market Outlook

The US Dollar fell further today, hitting its lowest level against the EUR in six weeks, and a three-week low against the Pound Sterling as higher share prices boosted demand for currencies seen as a higher-risk. The Dollar is currently trading lower against the GBP by nearly 120 pips at 1.6510, as well as against the EUR, as investors remain wary of making big bets in favor of the Dollar.

The USD also fell as stocks gained on speculation a gauge of the U.S. economic outlook improved and CIT Group Inc. was said to be close to a $3 billion lifeline from bondholders.

The USD may continue to weaken further today, as forex traders feel that the USD is a risky bet. As a result, fears about the Dollar's instability have led Oil to rise above $65 per barrel. If today's trend continues, then the USD may be in for a bumpy week as a sell-off of the Dollar may hit full-force. Traders are also advised to follow FOMC Member Lockhart's Speech at 17:30 GMT. This speech is very important as it is very likely to impact the Dollar's volatility.