Risk aversion leads to USD gains
- Last Updated on 22 February 2012
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The USD was able to largely recoup the losses it took on Monday throughout yesterday's trading session, as ongoing euro-zone worries led to risk aversion in the market place. The EUR/USD fell over 100 pips yesterday, to just below the 1.3200 level, before staging a mild upward correction. The AUD/USD also fell close to 100 pips yesterday. The pair has been unable to break the 1.0800 resistance level and has dropped as low as 1.0652. Meanwhile, against the Japanese yen, the dollar has managed to hang onto recent gains, but has been unable to break above the 79.90 level.
Turning to today, a lack of significant international news means that any announcements out of the euro-zone will largely decide risk appetite. Investors are still skeptical of Greece's chances of avoiding a debt default. Furthermore, there has been increased talk as of late about whether Greece will be able to remain in the euro-zone. Any further indication that the Greek crisis will persist may result in safe-haven currencies, like the greenback, extending their recent gains.
Later in the week, dollar traders will want to pay attention to several US indicators, including the Unemployment Claims and New Home Sales figures. Both are considered valid signs of how the US economic recovery is proceeding and have the potential to generate significant market volatility when they are released.