USD Still Strong

The EUR tumbled further on Monday without any major economic data releases in sight. The Single Currency continues to be lackluster as the combination of the European financial crisis remains in the spotlight and the outlook for the global economy weakens. The EUR finds itself near support levels in which it is finding an abundance of pressure and the question is if it will be able to withstand the tests. The E.U. summit from last week has come under an increasingly critical eye as investors find themselves listening to whispers via ratings agencies who have suggested further downgrades may be approaching. The GBP and AUD also lost ground to the USD in the wake of the EUR weakness.

Germany will see the publication of the ZEW Economic Sentiment marks today. With investors already weary a poor outcome may actually go unnoticed, while a better result than expected may give the EUR a small bounce. However the crux of the focus for investors will remain developing news from any European officials and Sovereign Debt yields from the likes of Italy, Spain, and France. Equities among E.U. bourses continue to react poorly to the financial crisis and the outlook for the short term remains rather gloomy. Data will stay relatively light from Europe after today until Thursday, when PMI figures will come from Germany and France. The EUR now finds itself on its weaker legs and many investors are watching to see how the Single Currency will react at these levels. In the past the EUR has been able to find the ability to withstand these lower ranges and bounce back to a higher range. But with so many questions surrounding European banks, debt, and growth prospects the specter of the EUR falling lower is a natural possibility in the coming weeks.

The U.S. will get plenty of attention today. Retail Sales figures will be released. But looming later in the day is the Fed’s FOMC monetary policy statement and press conference. The U.S. has done a tad better in terms of economic data compared to its counterparts the past couple of months, but there is a huge amount of concern about the possible knock on affects that could come from the fallout of a European meltdown. The USD has found itself picking up a wide swatch of new fans the past couple of months as investors examine with greater scrutiny the problems facing Europe. The question for the USD is what will happen in the short term for traders regarding tests of ranges. Wall Street suffered losses on Monday under the duress of the European saga, but also talk about a report from Intel, the microchip corporation, didn’t bolster confidence – this as news indicated Intel would issue a less than sterling profit outlook.

Gold struggled again on Monday and is around 1653.00 USD as of this morning. The precious metal continues to lose ground upon strength from the Greenback. It should also be pointed out that economic data from India has been downgraded, and there are also reports that large investors in Asia have been selling in early morning trading the past two days. Gold must continue to be watched and traders with enough stamina to participate within its sphere should carefully manage their risk management.

The JPY remains quite consolidated. And this should not come as a surprise as investors lock into its tight ranges as a safe haven. The broad markets including Forex could see another day of swift trading. Even though the Fed will release its FOMC Statement later today which typically produces cautious movement, this week represents in many ways the last week of full volume before the holiday season starts to affect trading. Equities, bond yields, and physical resources remain crucial barometers.