Dollar Remains Strong on Economic Outlook, Euro Concerns

The U.S. dollar started this week trading near a three-month high versus the European common currency as optimism regarding the improving economic conditions in North America maintained the greenback at high levels versus most of the 6 main traded currencies.
The dollar continued strong this Monday insisting on a winning trend that started in the end of November when the U.S. currency touched the lowest level in 2009, as positive reports in North America provided grounds for speculations that economic stimulus set by the Federal Reserve would be lifted before previous estimates, shifting sentiment towards the greenback at the same time concerns regarding the financial future of several Eurozone members emerged, specially regarding public deficit and the banking sector. A part from an improving economy backing the dollar, risk aversion has been favoring the greenback and currencies like the yen and the Swiss franc, specially last week after Greece’s credit downgrade.
Several analysts affirm that dollar’s strength is likely to improve even further in the beginning of 2010, as it could be used as a funding source for carry traders, considering extreme low borrowing costs still available in the country.
EUR/USD traded at 1.4346 as of 13:20 GMT from virtually the same rate when markets opened yesterday. AUD/USD declined slightly to 0.8855 from 0.8909 Sunday evening.

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