EUR/USD Ready For 1.40! What�s Next?

[B][U]by Lena Manousaridi[/U][/B]

This week has started with dollar strength all across the board! The dollar is back! Is it here to stay though? Well so far things for the dollar bulls are looking good, with EUR/USD trading under 1.4050 for most of this morning session and GBP/USD clearly on a downside move breaking important 2.0300 and still chasing the stops near 2.0280.

As we see the dollar correction is clearly underway and as long as the EUR/USD pair trades under 1.4110 there are hopes for further downside move towards 1.3980. As we said though in order to have a reversal in the recent upward trend, we need to see break of 1.3940.

Lets not jump the gun just yet, as more data are coming this week and also this evening we have the very important FOMC minutes from the last meeting. All eyes will be there, as last month Bernanke and his pals cut the rates by 50 points, causing the euro to fall further and print life time highs at 1.4265. Many analysts changed their estimations for further rate cuts as early as next month, what with better than expected payroll data and speeches from Fed officials who are still crying out for inflation. If the minute�s show that Feds move to cut was a one time thing, we might see further dollar gains, as investors will be looking to continue the recent move and hunt more stops from the buyers as they go along!

Today we don�t have anything else, however beware the New York open as traders from the US are all back at their desks and it will be interesting to see how they will �play� the dollar at these levels, as the last few weeks they were always selling the greenback.

Lets not forget that later this week we have PPI from the US and also retail sales. So, the dollar is not in the clear just yet and with any indication of negative data, market players will be ready to sell the dollar for another try of its recent lows.

GBP/USD is trading under 2.0300 at the time of writing and if that holds after the New York open, we might see further drop in the pair and tests of 2.0240 which is the next big support level.

EUR/USD stalls around 1.4020 and quickly reverses the move, with the pair at 1.4034 at the time of writing. As long as the pair trades under 1.4055 which is todays high, there is scope for at least the test of 1.40 which if breaks then stops can be triggered and eventually 1.3980 can come into the picture.

So, lets see how much can the dollar gain this week and when are we going to see 1.40 break before we can start say that Dollar is Back�