Greenback at Crossroad

The dollar traded mixed on Wednesday, higher against the yen but lower against the euro. The USD/JPY rose following the successful test of the 92-area support. The EUR/USD was higher on improved risk appetite and soaring gold prices; however, remaining below the important 1.31 resistance. The USD/CAD fell, testing the important 1.25-area support. The Australian dollar declined modestly despite higher oil and commodity prices.

Pressured by the global financial debacle and deepening UK recession, the pound reached its lowest level since the euro inception and the lowest against a trade weighted basket of currencies since records began in 1981. The GBP/USD gained modestly but failed to penetrate the resistance from the downtrend. Support exists in the 1.45-area. The pair is in a clearly defined downtrend. A penetration of this trend may lead to a short-term rally to the 1.55 resistance.