Bernanke concerned with growth than inflationary worries

The most dramatic move of this session came at the expense of the US Dollar, when a major US newspaper reported that a source close to Fed Chairman Ben Bernanke stated that Bernanke is privately more concerned with growth than inflationary worries. What this equates to, as per the anonymous source, is that there is no plan for the Fed to raise rates anytime soon. This sent the EUR/USD launching to new highs not seen since everyone jumped on the Dollar bandwagon last week. EUR/USD in a matter of minutes jumped from 1.5460 to levels near 1.5520 when the news was released. Later highs in the Euro touched 1.5540, but by session's end it had leveled off near a 1.5530 level. Look to 1.5560 as a resistance level on the upside. With the ZEW index data release later at 900 GMT, the EUR/USD pair could be poised for another big move.

The GBP/USD pair came close, but did not top the 1.9685 highs made less than 24 hours ago. A strong move was made from 1.9615 to highs near 1.9673 ahead of the CPI data later at 8:30 GMT. It would seem that buyers of this pair are looking for a CPI number that will press the case for the BoE to hike rates.

In the USD/JPY pair, we saw the Dollar facing some selling pressure as well, with the Dollar coming close to revisiting the lows of the NY session near 1.0378. While never breaking the 80 level in quiet trading, it was obvious that traders were keen on locking in earlier profits on the back of Dollar strength. EUR/JPY broke the 167.80 level briefly, but was back in sideways trading by session end.

Although it would seem that the Dollar buying mindset has hit a temporary pause, it is safe to believe that many are looking to the slew of US data to be released tomorrow, including; PPI, Current Account Balance, Industrial Production and Housing Starts. Beyond that, as is now par for the course, keep an eye on Crude Oil and its wild price action to see if it can top yesterday's record highs.

Sources: Forex News