Forex - Greenback under pressure as overall sentiment on US economy deteriorates

The US dollar extended its decline as overall sentiment on the broader US economy deteriorated due to expectation that the Fed will cut rates after weak Labor department figures on Friday. Several Federal Reserve members reiterated that the US faces both inflation concerns coupled with downside growth risk. Traders await retail sales data this Friday, eyeing any indication that consumer-spending could cause demand falling beneath supply.

Rising oil and gold prices boosted the Canadian dollar as investors believe Canada's economic growth will benefit, as the two commodities account for roughly 50% of the nation's exports. The USDCAD pair hit a low of 1.0506 in yesterday's trading.

The Euro fell late last night to 1.3782 as hedge funds sold off to take short-term profits. Traders however insist that the bullish trend is intact ahead of another week of possible disappointing US economic data releases.

EurUsd: Continue to look for a 100% retracement to 1.3842, the all-time high with an eye for the psychological 1.40 handle. On the downside, there are no obstacles back down to 1.3666 and then 1.3608, the former 50% retracement level.

GbpUsd still holding steady at the 61.8% retracement level of 2.0273 with strong upside potential. Should it's behavior mimic that of the Euro, we eye a short-term target of 2.0465, a strong resistance. On the downside, 2.0156 holds as the first support with strong support down to the lower trend-line at 2.0070.

UsdJpy has clearly eyed it's previous low of 111.58. Look for either a bounce back to 114.57 which will open the door back to 115.50, or, a slam down through 111.58, after which 109.00 will be the major target to hit, the May 17th, 2006 low.

UsdChf still hovering between upper and lower trend-lines of the triangle, this pair will break out with a vengeance very soon. Look either for a break down through 1.1800 to be short, or 1.2145 to be long.