Forex Review – Dollar gains after Bernanke speech; euro down, gold plunges $100

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The euro fell sharply against the dollar during the U.S. trading session after a testimony from U.S. Federal Reserve Chairman Ben Bernanke suggested the Fed was unlikely to engage in more easing in the short term.  With no mention of QE3, the markets reacted negatively and risk appetite was dampened.


In his testimony before Congress, Bernanke said the U.S. recovery remains uneven while oil-driven inflation risks will be temporary and global market issues continue to pose downside risks.


Euro pared all gains made earlier against the dollar when it rose after the ECB allotted 530 billion euros in its second LTRO, which allowed commercial banks to borrow at a low rate of 1 percent, with the aim of averting a credit crunch.  EURUSD fell to a session low of 1.3313 from an early session high of 1.3467.


The dollar reversed losses and gained broadly against most major currencies. The ICE dollar  index which tracks the greenback’s performance against a basket of major currencies, rose to 78.617 from 78.156 before Bernanke’s comments.


The British pound trimmed earlier gains, with GBPUSD falling to 1.5903 from 1.5990.

Against the yen, the dollar reversed losses and strengthened to Y81.30 from Y80.24.

USDCAD bounced from a five-month low of 0.9843 to 0.9908.

Gold was the biggest loser, plunging around $100 just in New York trading hours, falling from $1,786.02 to $1,686.70.