Greenback comeback in the European session

The massive sell off of the US dollar during the Asian session was met with some skepticism in the European one.

The dollar is partially recovering, with most currency pairs returning to less exaggerated levels. Perhaps Bernanke was dovish, but not extremely dovish.

• EUR/USD, which already crossed the 1.32 line, is down to 1.3034. All in all, it gained over 150 pips since Bernanke began answering questions, but this is way off the 300+ gains. Will it break below 1.30?
• GBP/USD, which met resistance at 1.52 is now down to 1.5070, still a safe distance from the all-important 1.50 line.
• USD/JPY, which made a relatively more limited move down to 98.50 or so, is back above 99.
• AUD/USD, which received a mixed employment report (more on that later), couldn’t conquer the 93 level and is at 0.9227, below the temporary double top.
• The Canadian dollar is standing out: it managed to hold on to its gains. USD/CAD is at 1.0370.

Bernanke did have bearish words: he said that accommodative monetary policy is here to stay, that the unemployment rate overstates the health of the US economy and that the Fed is missing on both its targets.

However, the move higher came on low liquidity, thus making the moves exaggerated. It’s also important to remember that Bernanke said similar things in the past, and that tapering of QE still means monetary expansion – an accommodative, loose, monetary policy.

An important indicator for jobs will be released today. See how to trade the US jobless claims with EUR/USD.