Dollar Rally Pauses

On the big surprises yesterday was the GBPUSD as it traded higher on negative remarks from the Bank of England's Governor Mervyn King.  The pair hit a high of 1.5650, and has since stayed comfortably above 1.5600.  The move was part of an overall drop in the USD yesterday which also saw the USDJPY trade lower, the AUDUSD higher, and the EURUSD going sideways, even as the Euro was weaker against other major currencies.

This leads us to today's trading where US economic data will be headlining the events later on in the day, as US Durable Goods Orders and Pending Homes Sales numbers will be released.  Depending on the outcome, it could cause a continuation of yesterday's dollar weakness.

EURUSD: As the chart below shows, the EURUSD hit a new low for the week yesterday on negative news from Italy, but quickly rebounded back around 1.2500.  The lack of selling momentum even with the Italian news indicated that Forex traders may not yet be ready to go full throttle on selling the pair.  As such, if today's US figures are worse than expected the EURUSD could be positioned to breakout higher if it trades above its 1.2520 intraday resistance.  

GBPUSD: After holding most of its post Inflation Report gains, the next step for the GBPUSD is to trade and hold above yesterday's highs.  On such a scenario, it would reveal that yesterday's buying momentum has staying power and could trigger a longer rally towards the 1.5800 figure.