Forex Daily Outlook February 4, 2010

We may now be seeing the final leg down in favor of the dollar. Initially, price action during the Asian session and during the first several hours of the London session was dollar bearish and we anticipated a further retracement, perhaps as high as 1.4100 vs. the euro; however, it all turned around and the market continued buying dollars following worse than expected UK and EU data, into the London close and throughout the entire New York session. We are now getting closer to the big NFP release this Friday, which may solidify our belief in further dollar strength. We hope to see little movement before Fridays data release, but with EU and UK interest rate policy announcements, we will surely see more volatility. Expect further dollar strength.

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