Safe-Haven USD Gains on Riskier Currencies

The US dollar extended its upward trend against most of its main currency rivals during European trading yesterday, as investors remained fearful about the debt situation in Spain. In addition, renewed concerns about the health of Greece's economy sent investors to safe-haven assets. The EUR/USD dropped close to 80 pips to reach 1.2066, its lowest level since June of 2010. The AUD/USD fell just over 70 pips before finding support at the 1.0250 level. The USD was not as fortunate against its safe-haven rival, the JPY. The USD/JPY fell to a six-week low at 77.94 before staging a reversal and moving up to 78.20. Turning to today, dollar traders will want to pay attention to a speech from Fed Chairman Bernanke, set to take place at 12:45 GMT. Given that the US economy has slowed down in recent months, investors will be closely watching today's speech to see if the Fed Chairman will hint at a new round of quantitative easing. If he does, the dollar could reverse some of its gains from yesterday. That being said, if Bernanke remains quiet about any new steps to boost the US economic recovery, the dollar could extend its recent bullish trend.

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