USD Plunges Amid Wavering Confidence

Daily Forex Fundamentals | Written by MG Financial Group | Sep 23 08 03:32 GMT |

The dollar sold off sharply against the majors at the start of the week amid a sharp run-up in crude oil prices and steep declines in the US equity bourses. Oil posted its largest single day advance, rallying by $16.37 to $120.92 per barrel, which was largely attributed to the expiration of October contracts. The US equity markets sold-off sharply as confidence in the government's bailout plan and ability to steer the financial sector away from the current crisis wavered, sending the Dow Jones lower by 3.27% and the Nasdaq losing 4.17%. The greenback plunged by nearly 4-big figures against the euro from 1.4436 to above the 1.48-level while losing over 3-big figures versus the sterling from 1.8262 to 1.8588. Uncertainty over the US government's $700 billion rescue plan to purchase bad mortgage debts off banks' balance sheets has triggered heightened volatility in the financial markets and raised fears on whether it will solve the current crisis. The plan is still pending Congressional approval, with additional details possibly not revealed until next week. The dollar will likely continue to bear the brunt of the sharp volatility and concerns of a potentially sharp spike in the deficit. Spot gold continues to trade above $900 per ounce, while crude oil was up by over $25 per barrel in the previous session. EURUSD trades near the 1.48-level, with interim resistance eyed at 1.4820, followed by 1.4865 and 1.49. Additional gains are seen at 1.4930, backed by 1.4960 and 1.50. On the downside, support will emerge at 1.4750, followed by 1.47 and 1.4660. Subsequent floors are seen at 1.4630, backed by 1.46 and 1.4550. In the coming session, economic reports slated for release include Germany's September PMI, Eurozone July industrial new orders, Canada CPI, and the US Richmond Fed manufacturing survey. MG Financial Group http://www.mgforex.com Legal disclaimer and risk disclosure MG Financial Group, or any of its related companies, will not be held responsible for the reliability or accuracy of the information available on this site. The content provided is put forward in good faith and believed to be accurate, however, there are no implicit guarantees of accuracy or timeliness.