The dollar continues to search for direction as the week is coming to an end, and although we saw a lot of weakness in the last few days, it will be crucial to see how the currency behaves in the following week, what with important economic data coming out of US. Markets are trading on positive note since Asian session, as signs that the recession may start to stabilize are making investors more positive on their economic outlook.
The EUR/USD is trading higher still, however the pair needs to break free of 1.3360 in order to say that more upside is to be seen, as long as the pair holds 1.30 for now. Let's not forget that next week; the euro has a big challenge on its way, as ECB meets to decide on future of interest rates. Traders are speculating that Trichet and co may cut more by 25 points, however due to the latest split in members opinions, markets are unsure as to how the bank will proceed. For now, the euro is “trapped” within range of 1.31-1.33 and let's sees how the pair behaves if the latter level will be reached.
The economic calendar has a few important data today out of UK and US, with Manufacturing PMI coming out better than expected, giving the pound a push against all other currencies. The sentiment for the sterling is getting better, after the latest economic numbers are showing signs of recovery, driving the GBP/USD marginally higher towards 1.50. The latter level is very important and if it breaks, we may see further upside towards 1.52. Also we have ISM Manufacturing out of US later on, which is forecasted to give us a better number, and traders may want to monitor the result as the latest data of Manufacturing sector contracted by the most for years.
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