Forex - Dollar rallied after Bernanke’s testimony before Congress

Forex News and Events: The Dollar rallied on Monday despite an improvement in risk appetite and a drop in interbank lending rates as companies bought the US currency to meet their operational needs. London interbank offered rates for overnight dollars falling to a four-year low near the Federal Reserve's target rate of 1.5%. Analysts said the Dollar also received a boost from Federal Reserve Chairman Ben Bernanke's testimony before Congress endorsing another stimulus plan for the sluggish economy. A second package would reduce pressure on monetary policy to provide stimulus for the economy, although it could worsen the country's already huge budget deficit, they said. Tight credit conditions and fears of a global recession have lent the dollar a safe-haven currency status. Continuing efforts to bail out banks around the world, including the Dutch government's cash injection into ING and South Korea's pledge to pump funds into its financial system, pushed interbank Dollar lending rates lower and revived interest in risky assets such as stocks. EurUsd slid to yesterday session 1.3288 low, it was last down 0.54% at 1.3337. UsdJpy was up 0.34% at 102.02. EurJpy fell 0.18% to 136.07 after posting 134.81 intraday low. GbpUsd gave up earlier gains at 1.7518 high and was last down 0.72% to 1.7158. UsdChf rose 1.1% to 1.1497. AudUsd was up 1.97% at 0.7023, while NzdUsd advanced 1.4% to 0.6210. UsdCad was 0.82% to 1.1921.

Today's Key Issues (time in GMT): 06:15 CHF September Trade 1442.6m vs 1441.8m 08:30 GBP October CBI trends - orders -30 vs -26 12:30 EUR ECB’s Draghi speaks to Italian Senate Committee 13:00 CAD BoC rate decision 2% vs 2.5% 19:10 GBP Bank of England’s King speaks, Leeds 21:00 USD weekly ABC CCI -49 vs -48 00:00 CHF Swiss Government holds weekly meeting in Bern

The Risk Today: EurUsd Market drove below 1.3500 pivot level last week. On the upside, only a return over 1.4000 and 1.5000 will release actual pressure and may put key initial resistance 1.6000 into focus. Still a break up there would open the way to Trendline resistance 1.6200. Resistance holds 1.4002 former trendline support. Initial resistance holds 1.3769 Tuesday high. On the downside, further weakness will focus on 1.3056 support (retracement of 0.8231 – 1.6039 advance). Initial support holds 1.3215 today low. GbpUsd In the last two weeks, Market dropped as low as 1.6786 strong support. It recovered last Tuesday at 1.7631 high. Trading range holds 1.6786 - 1.7631. On the upside, strong resistance holds 1.7697 last weeks high ahead of 1.8304 former support. But renewed downtrend may look for 1.6568 November 2003 low and 61.8% retracement of 1.3682–2.1161 advances). Following supports are 1.4560 trendline and 1.3682 March 2001 low. UsdJpy Downtrend started in September is still valid having hit 97.91 on Friday 10th October and last week 103.07 rebound which marks initial resistance. On the further upside, recovery over 105 pivot point will put focus again on 108 and 110.67 15th August high. On the downside, renewed pressure may open the way to 95.75 17th March low. Current downtrend will stand below 103 upper trendline resistance. UsdChf Market posted 1.1547 high this morning. Further advance may open the way to 1.1596 December high and strong resistance. On the downside, only weakness below 1.0692, 22nd September low, would give direction down to 1.0500 and 1.0375. Such a move may look for 1.0013 15th July low in front of 0.9637 17th March low. Initial support holds 1.1291.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.5000 P 1.9363 S 110.67 T 1.2153 T 1.4867 S 1.8304 M 105.00 S 1.1895 T 1.3500 P 1.7697 S 103.07 M 1.1596 S 1.3260 1.7105 101.10 1.1515 1.3215 M 1.6786 M 100.00 P 1.1291 M 1.3259 M 1.6568 S 97.91 M 1.0692 S 1.3056 T 1.4560 T 95.75 T 1.0005 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot