While other central banks can be as dovish as they like, the power of the Fed was all too prevalent as the dollar sank and the euro shot up as a result of Ben Bernanke’s statement, breaching the $1.32 level last night.
Today’s release of the European Central Bank’s monthly bulletin contained similar dovish tones, echoing comments from the last press conference but with a more hawkish stance coming from Bundesbank president Jens Weidmann, who spoke at a banking conference in Munich earlier today.
The euro is finding buyers at the 100 DMA at 1.3020. A fall through here should find some support at $1.30.
Traders will still be inclined to keep a close eye on unemployment claims, due out at 1.30pm (London time). Given that Mr Bernanke believes US unemployment to still be an obstacle, a higher number than the 342,000 expected may weaken the dollar further.