After finding support near 1.1950, the Euro pushed stronger in late New York with a temporary move above the 1.20 level before retreating back to 1.1970.
The US employment data remained firm with the rise in jobless claims held to 277,000 in the latest week. The four-week moving average dropped to a six-year low which will reinforce confidence in the labour market. The data should also underpin near-term interest rate expectations and support the dollar, especially with Fed Governor Moskow taking an optimistic stance on the economy and stating that interest rates may need to rise again. The US currency will still be hampered by the degree of favourable news and extent of expected Fed tightening already priced in. The remarks from Fed Chairman Bernanke will be watched very closely next week for hints on policy and the testimony will be important for the dollar.
There will be caution ahead of the Friday monthly US trade data, especially as the report will be important for overall dollar confidence. A significant decline in the trade deficit would reinforce optimism over the US economy and currency while a fresh widening in the deficit would pose a major test for market confidence. The dollar reaction will also be an important indicator of overall market positioning.
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