By Rita Ruvinski – The EUR bounced higher against the U.S dollar Wednesday after a slide in U.S. consumer confidence to 10-month low raised doubts about the pace of a global economic recovery. Traders shift their focus now to Federal Reserve Chairman Ben Bernanke, whose testimony before the Congress on Wednesday and Thursday may set the tone for the EUR/USD pair.
The European currency pared some losses made the previous day but remained under pressure after the German Ifo index of business sentiment dipped unexpectedly, while French household spending and Italian consumer confidence turned lower. The EUR edged up 0.3% to $1.3543, having lost nearly 0.7% yesterday.
The single currency also inched up 0.3% against the Japanese yen to 122.18, lifted by speculation that hefty buying linked to launches of new Japanese mutual funds would boost higher-yielding currencies and assets in emerging countries. Still the EUR gains were not enough to make up for its 1.7% dive against the Yen the previous day.
The big event for the Forex market today is the central bank governor’s testimony at 15:00 GMT. If Bernanke is more dovish than the market expects, the USD could rally on risk aversion outlook. However if he remains hawkish and warns of additional normalization in the near future, the EUR/USD may decline to $1.34 as the outlook for U.S. interest rates brightens.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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