Although the trading of the US Dollar happened in tightly contained range for the last two months, traders now believe that it will bounce back. Positive data on the growth of US economy and higher treasury yields is supporting this belief. This week data on the jobs sector stateside may tempt a December taper back and may become a point for hot discussion at the Fed’s next meeting.

So far for FX majors, market continues to be in a range. The US Dollar index, ahead of its high of 81.02 in 25^th November, has failed just above its 100-DMA. Currently majority of the dollar longs are Japan Yen (JPY) based which obviously has a limited influence on US Dollar Index. However, DXY’s any slide will always get influenced by market sentiments.

Treasury yields have pushed back towards this week high by the stronger than expected data from the US ISM manufacturing reports. Reports from employment component also brought much attention due to its attainment of 18 months high value. Hence it is very important to analyze the US treasury yields, the US Dollars biggest supporter, which was exposed to the some favorable US data and a boring December.

Also this week we will be seeing many Central Banks coming up with their statements and corresponding fluctuations on their currencies. According to the sources, Reserve Bank of Australia is going to depreciate its previously precious Australian Dollar (AUD), which they feel still uncomfortably high despite a four percent drop since last quarter. Due to the speculation that Japan’s  core CPI will not achieve its expected  two percent rise in two years, JPY also remains under pressure and may result in Bank of Japan (BoJ) calling for further easing. There is a general belief that BoJ is planning for expansion of economic stimulus program. Expecting more radical ideas from BoJ, USD/JPY went above 103.3, the highest level since May even after the speculation of more BoJ easing. Euro (EUR) is managing to ease itself a bit higher, as the market heads stateside. Drop in Spain’s November Net Unemployment rate also aid to this easing. Heavy US/JPY also allowed the EUR/JPY to suffer, pressurizing to drop to 139.47. However, favorable data from US’s economy has increased expectation of market favoring in buying USD once again.