Wednesday, 22 Jul 2009

Dollar Falls as Bernanke Testimony Dominates Forex Trading

Since the opening of the U.S. market, the Dollar has declined against most of its major currency pairs. The Dollar is currently trading near a seven-week low versus the EUR, as equity gains in Europe and the U.S. reduce demand for the relative safety of the world's main reserve currency. The EUR/USD pair now stands at the 1.4230 level, whilst the GBP/USD cross is up by 60 pips at 1.6465.

U.S. Federal Reserve Chairman Ben Bernanke's testimony today about the state of the U.S. economy continues to dominate forex trading. Bernanke repeated the Fed's forecast that the economy should start growing again in the second half of this year. He warned though that growth would be slim, despite recent improvements in the U.S. economy, such as stabilization in consumer spending and the bottoming out of the housing market.

As the U.S. market comes to a close, the USD may continue to weaken further, as forex traders feel that the USD is a risky bet for today. As a result, a fear about the Dollar's instability may lead commodities such as Crude Oil and Gold to rise in late trading. If today's trend continues, then the USD may be in for bumpy end-of-week trading, as a sell-off of the Dollar may hit full-force.