The Euro and Dollar pairing didn’t start off on a good note yesterday, falling from 1.3620 to a low of 1.3515.

Forex Update: US Dollar / Euro

Lower than expected German factory orders helped drag the pair down, reporting a drop of 3.4% m/m in December vs. expectations for -1.4%. Mild short covering in EUR/GBP continued yesterday too which put further pressure on the single currency.

The trend showed signs of reversal overnight, though, and the Euro recovered against both the USD and GBP.

EUR/USD opened this morning at 1.3630 thanks to profit taking and to sovereign buying throughout Asia. German Industrial Production data is due in today, and may set the tone for the rest of the day’s trading as the only noteworthy news to be released today.

- US Dollar Euro (USDEUR) exchange rate currently trading at: 1 USD = 0.7498 EUR (-0.00163, -0.217%)

The recent meeting of EU finance ministers is affecting this pair as it is the others. Having been on the rise for three straight sessions, the single currency capped its gains yesterday as European officials disagreed about how to solve the Eurozone sovereign debt crisis. Germany rejected calls to increase the size of the EU bail-out fund and issue a single euro bond.

US Dollar Euro (USDEUR) Exchange Rate

Angela Merkel was critical of having a single European bond stating that current EU treaties don’t allow for such an issuance. Dollar weakness also comes from Fed Chairman Bernanke’s statements suggesting the Fed may expand bond purchases beyond the $600bn that was announced last month.

Currently trading at the $1.3350 level with focus still fixed on eurozone.

Today’s other Forex news:

British Pound US Dollar (GBPUSD)
Fears over eurozone debt issues sustained demand for the dollar yesterday, though gains have proved short lived with sterling half a cent higher this morning.

Even with Euro weakness continuing to support a stronger dollar, its climb has been hampered by comments from Fed Chairman Bernanke.

British Pound Euro (GBPEUR)
The pound made a small half cent-gain against the euro yesterday as fears arose from disagreements between EU finance ministers that the debt crisis is here to stay, at least for the short term. Investors were concerned primarily with the results of a meeting between European finance ministers, which indicated that the safety net for troubled EU members could increase to €750bn.

We will continue to monitor the US Dollar Euro (USDEUR) exchange rate throughout the day.

- US Dollar Euro (USDEUR) exchange rate currently trading at: 1 USD = 0.7190 EUR (+0.00067, +0.094%)

As the pound managed to hit a new peak against the dollar, the euro made a similar advance to hit $1.40, its highest level since January but was unable to sustain the level, dropping back to close unchanged on the day.

The major news on the market radar yesterday was the ECB, which left interest rates unchanged, as was widely expected. Trichet’s announcement yesterday also came as no surprise, indicating more or less that excessive currency volatility would be best avoided.

US Dollar Euro (USDEUR) Exchange Rate

As the ECB indicated that it would not take monetary easing measures anytime soon, it gave the euro a chance to rally up to $1.40, but of course that price level proved unsustainable, and the euro fell again to $1.39 this morning after a round of profit taking. There is still considerable downside risk to the dollar at this point.

Today’s other Forex news:

British Pound US Dollar (GBPUSD)
Sterling saw a rise above $1.60-levels yesterday for the first time since February. But at this level there was considerable profit taking, which drove the price back down to around $1.5850. Sterling was able to break the $1.60 barrier thanks in part to better than expected UK factory production numbers and the BoE’s decision to hold back from taking further monetary easing measures.

British Pound Euro (GBPEUR)
It was a wash yesterday for sterling, which closed the day virtually unchanged against the euro. Yesterday’s minimal gains and loses were the result of both positive and negative data released in the UK, both a record drop in house prices and a larger than expected strengthening in the manufacturing sector.

We will continue to monitor the US Dollar Euro (USDEUR) exchange rate throughout the day.

- US Dollar Euro (USDEUR) exchange rate currently trading at: 1 USD = 0.7310 EUR (+0.00520, +0.716%)

It was a good month for the euro as it gained over a cent against the dollar to reach a seven-month plateau near $1.38. The dollar, however, remained under heavy selling pressure against other currencies on Friday as concerns loomed that the United States may have to pump up its ailing economy with more cash.

US Dollar Euro (USDEUR) Exchange Rate

On these fears, the greenback dropped to its lowest level since March against the euro and was also off against the yen after data was released showing the US manufacturing activity expanded at the slowest pace in 10 months, shrinking demand for US assets and offsetting a rise in consumer sentiment. Still, the US data we’re seeing so far is not consistent with a double dip recession. Though it is disappointing data, it can’t extinguish the light at the end of the economic tunnel.

Today’s other Forex news:

British Pound US Dollar (GBPUSD)
The pound rose against a broadly weaker US dollar on Friday, gaining over a cent to bring the price back above $1.58, though the upcoming Bank of England meeting on Thursday could halt the pound’s gains. The greenback remained in a lose-lose situation on Friday with investors still selling the currency ahead of feared monetary easing. Manufacturing data from the Institute for Supply Management agreed with the Federal Reserve’s forecast of modest growth for the US, but that wasn’t enough to sway investors.

British Pound Euro (GBPEUR)
The pound ended the week without much of a bang, edging lower once again against the euro as disappointing data came in that reinforced fears that Britain’s recovery is faltering. Indeed, data on Friday showed Britain’s manufacturing activity weakened more than expected in September, growing at the slowest rate in 10 months on low demand for exports. The pound closed out the week at a fresh four-week low, trading below 1.15 and the price is holding steady at that level this morning.

We will continue to monitor the US Dollar Euro (USDEUR) exchange rate throughout the day.

- US Dollar Euro (USDEUR) exchange rate currently trading at: 1 USD = 0.7279 EUR (-0.00528, -0.721%)

The euro hit a new five-month high against the dollar yesterday as data surfaced showing eurozone banks are now less financially dependent on the European Central Bank.

As the ECB makes fewer loans at their latest tender, expectations were strengthened that Europe may gradually phase out economic stimuli before other major economies like the US and Britain. This helps balance the current Ireland banking issues.

US Dollar Euro (USDEUR) Exchange Rate

The Irish government for its part said that the total cost of patching up its banks, which were hard hit by a housing bust, could total as much as €50bn, which is equal to about a third of the country’s GDP last year.

Today’s other Forex news:

British Pound US Dollar (GBPUSD)
Having risen to a fresh seven-week high above $1.59 the pound slumped in later trade to close half a cent lower on the day. Concerns about the Fed’s next policy meeting were hutring the greenback throughout the week this week.

With ten US figures due out this afternoon, investors are on pins and needles waiting for indications of what lies ahead for this pair.

British Pound Euro (GBPEUR)
In a tumultuous trading session the pound closed the day lower against the euro, giving up what gains it had made early in the session to find itself trading in the low 1.15s. The euro faced slight downward pressure as Ireland announced a €34bn figure for bailout costs for Allied Irish Bank, Ireland’s second-largest bank. Moody’s downgraded Spain’s sovereign debt, which added to the negative sentiment beleaguering the euro.

We will continue to monitor the US Dollar Euro (USDEUR) exchange rate throughout the day.

- US Dollar Euro (USDEUR) exchange rate currently trading at: 1 USD = 0.7461 EUR (+0.00393, +0.530%)

The euro rose to new strength against the dollar yesterday, the highest level since April, but with too little momentum to stage a full rally, and the price has dropped again this morning as debt problems at European banks and other eurozone economic worries addle the market. Ireland and Portugal are of particular concern in the market with the final figures due out later this week detailing the total cost of a government bailout of Anglo Irish. Some estimates put that figure as high as €35bn.

US Dollar Euro (USDEUR) Exchange Rate

Having reached above $1.35, the euro fell from a five-month high as renewed signs of debt problems at European banks and nations such as Ireland and Portugal reduced demand for assets in the 16-nation region.

Today’s other Forex news:

British Pound US Dollar (GBPUSD)
The pound marked a five-day rally against the dollar yesterday as it rose to a seven-week high, on fears that the Fed may change interest rates in the US to help the economy avoid double-dippage. The dollar caught a break this morning as a report suggested the Fed may opt for a smaller than planned asset purchase program.

British Pound Euro (GBPEUR)
In the absence of forthcoming data early this week, trading was muted as the market waits for direction. This pair was virtually unchanged yesterday, with the price still holding steady at $1.17. Limited impact on the pound came from property firm Hometrack’s September data that showed UK house prices rose at the slowest rate in seven months.

We will continue to monitor the US Dollar Euro (USDEUR) exchange rate throughout the day.

- US Dollar Euro (USDEUR) exchange rate currently trading at: 1 USD = 0.7430 EUR (+0.00055, +0.074%)

The euro extended gains against the dollar on Friday, nearing the $1.35 level, but couldn’t muster strength to rally above that level. The price dropped back this morning to trade around $1.3451

US Dollar Euro (USDEUR) Exchange Rate

Although no specific actions were decided upon at the Fed’s recent meeting, the fears instilled by the meeting were enough to affect markets this morning, pushing the dollar lower across the board but particularly lower against the euro. Housing data also came in below expectation, and we expect the dollar to remain under heavy pressure, especially as the Fed could take monetary easing measures soon.

Today’s other Forex news:

British Pound US Dollar (GBPUSD)
The pound closed the week with a mere 1.5 cent-gain against the dollar due to weaknesses perceived in the dollar. After the Fed’s latest meeting, where further monetary stimulus was proposed, market sentiment toward the dollar turned markedly more sour, and the dollar lost ground across the board.

Pressure against the dollar increased on Friday heading into the weekend as data from the US housing sector came in below expectations, unchanged versus the slight increase that analysts were expected. Going forward, the dollar is in a tough position, as positive economic news will lure investors away from the dollar, and negative news will send the dollar lower still.

British Pound Euro (GBPEUR)
The pound moved lower against the Euro on Friday as positive news surfaced on Germany’s economy. The news came from a German index showing business sentiment had increased this month. Given the economic woes in the eurozone, analysts had forecast a decline in this index, so the positive surprise lifted the currency considerably, but those gains have now started to vanish.

We will continue to monitor the US Dollar Euro (USDEUR) exchange rate throughout the day.

- US Dollar Euro (USDEUR) exchange rate currently trading at: 1 USD = 0.7449 EUR (-0.00503, -0.670%)

A slew of weak figures from the eurozone yesterday provided the impetus for investors to begin profit-taking on the euro’s recent gains, driving the currency lower. Reports showed that Germany’s manufacturing and service sectors grew more slowly than expected in September, pointing to what will likely be a weaker third quarter.

US Dollar Euro (USDEUR) Exchange Rate

The figures dropped the euro back below $1.34 and selling continued after a report showed that Ireland’s economy shrank by 1.2% in the three month period ending in June due to banking weaknesses in the country. Surprisingly, the number of Americans seeking unemployment benefits rose unexpectedly, while existing home sales dropped to the second-lowest level on record for the US. Looking ahead, it’s unlikely the euro will climb above $1.34 if the news environment stays as it has been for this pair.

Today’s other Forex news:

British Pound US Dollar (GBPUSD)
The pound climbed higher against the US dollar yesterday, but is finding resistance at $1.57. There is quite a bit of speculation right now that the UK could be facing another period of recession, which is putting downward pressure on the pound despite weaknesses that are also apparent in the greenback.

British Pound Euro (GBPEUR)
Sterling saw heavy selling in the early part of the week but regained some ground yesterday against the euro as disappointing news stirred investor concerns about weakness in the eurozone. As weaker-than-forecast figures came to light concerning the strength of European economies. Ireland reported economic shrinking of 1.2 percent in the second quarter instead of posting modest growth as expect.

We will continue to monitor the US Dollar Euro (USDEUR) exchange rate throughout the day.