Wednesday, 20 Oct 2010

USD Reverses All of Yesterday's Gains in Heavy Trading Session

The US dollar had one of its worst days in recent memory today, when it tumbled against virtually all of its main currency rivals. The ailing currency hit a fresh 15 year low against the Japanese yen at 80.84. The USD/JPY pair has since recovered slightly, and is currently trading around the 81.15 level. The EUR/USD pair is once again testing the psychologically significant 1.4000 resistance level. Currently the pair is trading around the 1.3955 level, down from today's high of 1.3989.

Analysts attribute the dollar's bearish trend to a new report predicting just how extensive the Fed's quantitative easing program is likely to be. Predictions are that the program could be implemented as soon as next month, which if true, is likely to further dampen investor confidence in the struggling US economy. It seems that for now, going short on the greenback is a strategy likely to pay off.

Tomorrow, traders will want to pay attention to several economic releases likely to generate market volatility. At 12:30 GMT, the latest US Unemployment Claims figure will be released. At 14:00 GMT, the Philly Fed Manufacturing Index is set to publish its latest figure. Both are considered to be significant indicators, and are likely to lead to heavy trading among USD pairs. Whether or not they will give the dollar a boost will only be known tomorrow.