The release of better than expected figures of ISM Manufacturing PMI brought the Dollar tumbling. The indicator reached its 11 month high of 48.9. It appears to be much higher than forecasted 46.4. The improvement in U.S. construction also added to optimism. Risk appetite grew on Monday bringing decline in demand for the greenback. The U.S. currency tumbled against all major Forex currencies as traders believe that the worst of recession is over expecting sooner growth. Therefore, the Dollar declined to its 7 month bottom.

The EUR/USD pair jumped to as high as 1.4444, before ending the trades at 1.4421 level the lowest rate for 7 months. The USD fell by about 250 pips vs. the British Pound to 1.6980. One of the only currencies that the Dollar appreciated against yesterday was the Yen.

Among today`s economic events, forex traders can assume volatile market. The Dollar is expected to rise against its major currency counterparts. The traders are expecting for the release of Personal Spending and Personal Income data at 12:30 GMT, and the release of U.S. Pending Home Sales at 14:00 GMT.

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Think, Feel, Trade

This week the USD trading is featured by high volatility. The main reason of such a behavior is the data that came from the USA. US Retail Sales index surged delivering signs of the US economy recovery. The CPI unexpectedly rose by 0.4 percent showing that the inflation is likely to rise this year. This could produce a bigimpact on the USD, as the rising inflation usually leads to an interest rate rise, which may very well support the Dollar.

However, the FED is likely to remain its Refinancing Tender rate at a record low on Thursday.

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Think, Feel, Trade

The FOMC decided to keep rates between 0% and 0.25%, the dollar is weakening right after the announcements. But I think it will go up, since this means the economy is in recovery…

I do not completely agree with you. Economic recovery definitely brings rising in industrial indices. Traders will try trading with CFDs, futures and indices as these assets are considered higher yielding. Forex traders will abandon (to some extent definitely)trading with Dollars and its value will depreciate.

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Think, Feel, Trade

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Buy Gold