Forex - USD rises sharply against major currencies; commodity prices fall

The USD posted a huge gain against the Euro and British Pound in yesterday's session even though the G7 statement clearly suggested that the Euro-zone was comfortable with current Euro levels. The ECB does, however, point towards growth concerns in the fourth quarter. The EURUSD and GBPUSD fell to daily lows of 1.4126 and 2.0258 respectively. The dollar received a boost from stabilized S&P 500 (after a drop on Friday) and a decline in oil prices, as oil fell from $90/barrel to $85 yesterday. News from the U.K. on two more banking groups putting together emergency funds to help customers hit by the credit crunch further pushed the Cable lower. This raises new questions whether the British economy has been more deeply affected by the credit market turmoil than originally expected.

As the US dollar takes a turn to shine, precious metals prices took a dive as well. Gold fell from $768 an ounce to $745 before closing at $754. Silver hit a low of $13.2725 before recovering slightly to $13.4650. We look forward to a light day of news today before heading into a barrage of US announcements from Wednesday onwards.

EurUsd after the massive sell-off at the target rate of 1.4350, this level holds as a major resistance. A break of 1.4050 would be very bullish. Initial support found at 1.4140.

GbpUsd hit the bottom of the range yesterday at 2.0258 and holds as a strong support, but a break of this level will expose 2.0145 with ease. On the upside, there is no trouble moving back to 2.0536.

UsdJpy hovering around the 50% retracement of the 111.63 to 117.97 up trend, initial support is found at 114.05 and strong resistance at 115.55. Bears keep selling anything below 115.55. Above this level is short-term bullish.

UsdChf halted close to the 1.1800 resistance, topping out at 1.1786, which leaves this pair bearish. A break above could signal a move higher to 1.1953. On the downside, there is space for maneuver to 1.1630.