Overview

The dollar rose slightly against European currencies overnight, continuing to rebound from multiyear lows touched last week, as traders awaited U.S. economic data later this week.
At the same time, the yen edged higher versus the dollar and the euro after Standard & Poor's upgraded Japan's sovereign rating to AA. That move boosted confidence about long-term growth prospects for the world's second-largest economy.

The dollar slumped to a 26-year low against the British pound and approached an all-time low against the euro last week, on growing expectations that the interest-rate differential between the U.S. and Europe will narrow soon. The weak-dollar trend over the past few weeks should be sustained until at least the start of the Northern hemisphere summer, as euroland and the U.K.'s tolerance for currency strength is likely to be much greater than in late 2004.

Investors will have a wide range of economic data to sift through later this week, including sales of existing and new homes, consumer confidence, durable-goods orders and the initial estimate for first-quarter gross domestic product. GDP is expected to rise just 1.8% in the first quarter, according to a MarketWatch survey of economists. It would be the slowest since the 1.8% in the third quarter of 2005, after the devastation of two major hurricanes.

The A$ fell sharply today following lower than expected CPI, suggesting that next month's expected rate rise is now off, and alot of the hot air in the A$'s balloon is quickly evaporating.

Data for today

US: Consumer Confidence

US: Richmond Fed

US: Existing Home Sales

For today:

- Sell USD/JPY around 118.60, with initial stops above 119.10. Or sell a break of 118.20, with stops above 118.40

For more ideas please email: tradingdesk@pinnacleforex.com