All of the currency pairs that we cover in our Forex Trading Alerts have one thing in common – all of them involve the US Dollar. In today’s issue we will focus on this particular currency by analyzing the USD Index from several perspectives. This will put the most recent price swings in a bigger picture and should help to differentiate between important and rather random moves.

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Earlier today, the data showed that the euro zone’s preliminary manufacturing PMI climbed to a four-month high of 50.8 this month (beating expectations for a rise to 50.5), while the preliminary reading of the services PMI rose to 51.9 in December (also above the forecast of an increase to 51.5). Additionally, the ZEW Centre for Economic Research reported that its index of German economic sentiment climbed to 34.9 from 11.5 in November, well above the forecast of 20.8. These bullish numbers supported the common currency against the greenback and pushed EUR/USD above the barrier of 1.2500. Will we see further rally?

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Earlier today, official data showed that industrial production rose 1.3% in the previous month, beating expectations for a 0.7% gain, which pushed the greenback higher. In response, EUR/USD gave up some gains, but is still trading in a consolidation. Is this a sign of strength?

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Earlier today, the U.S. Department of Labor showed that the U.S. producer price index fell 0.2% last month, while core producer price inflation (without food, energy and trade), was flat in November, missing analysts’ expectations. Although the Thomson Reuters/University of Michigan preliminary consumer sentiment index climbed to an almost eight-year high of 93.8 this month, the data released earlier continued to weigh on investors’ sentiment and pushed the greenback lower. How did this drop affect the technical picture of major currency pairs?

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Earlier today, the U.S. Department of Labor reported that the initial jobless claims in the week ending December 6 dropped by 3,000 to 294,000, beating forecast. Additionally, the U.S. Commerce Department showed that retail sales increased by 0.7% last month, beating expectations for a gain of 0.4%, while core retail sales (without automobile sales), increased by 0.5% in November, surpassing forecasts for a 0.1% gain. These bullish numbers supported the greenback and pushed GBP/USD lower, but the pair is still trading close to the key resistance line. What’s next?

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