Dollar Ranges whilst Euro Makes Slight Progress

The Dollar made mixed headway during the night with the EURUSD climbing slightly to its current value of 1.3935 (see hourly chart) whilst the USDYEN fell from its highs of 90.90 to 90.55 presently. This range trending is expected to continue through the week as the markets prepare themselves for the release of the US Non-Farm Payrolls on Friday.

Good economic data releases have helped the EURO to recover for a second day as they have projected an enhanced outlook for future growth. However, a prominent Euro-zone official has warned overnight that the region’s economic activity would well remain subdued for many years as a result of the global economic crisis.

The British pound had a poor night with the GBPUSD falling to lows of 1.5905 before bouncing back to 1.5940. This action is due to investors trying to determine the prospects for a sustainable UK economic recovery. However, the markets still expect the Bank of England to maintain its interest rate at the current value of 0.5% when it announces its decision later this week.

There is an event risk later today when the US Treasury Secretary, Tim Geithner, testifies before the Senate Finance Committee. He is expected to face intense questioning about why the US budget deficit is anticipated to remain at about $1.3 trillion for the coming year.

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