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Forex pairs in this Article » EUR/USD, GBP/USD, USD/JPY
FXstreet.com (San Francisco) - The world is becoming a believer about the US economic recovery with the USD trading firm and Wall Street rallying for second day. The concerns following Friday's NFP has been dispersed in the last two days with upbeat economic data and better than expected corporate earnings.

The taper story still looms in market, but investors are confidence the economic growth will be well enough to support the Fed's cut. In this framework, the Dollar was the winner of the day: EUR/USD and GBP/USD trading down while USD/JPY going up.

Jamie Coleman from FXBeat commented in a recent piece: "As more and more data is released, the December employment report looks more like an outlier." Earlier in the day, the NY Empire State manufacturing index showed a jump to 12.51 pts in January from December figures of 2.22. It was the highest reading since May 2012.

Later in the session, the Federal Reserve published a bullish Beige Book. “Nothing in this Beige Book that would dissuade the FOMC from tapering an additional $10 bln at the late January meeting,” pointed Coleman.

Significantly, the Global Market Forum of Reuters published in its Twitter account: “Beige Book: 83 instances of root word "strong" vs 69 in Dec. 4 report. Root word "weak" appears 24 times, vs 29 last report.”

The EUR/USD declined hard on Wednesday as the pair extended 1.3700 yesterday's rejection and it extended loses to test the long term ascendant trend line coming from 1.2754 July low, today at 1.3580. The pair closed at 1.3605 while it's maintaining bearish mood in 1 and 4 hours chart.

The GBP/USD declined to test 1.6320 key support in the early American sesion, but the cable bounced at this level and closed at 1.6375. "The hourly chart shows the bearish tone persists, as price stands below a bearish 20 SMA while indicators hold in negative territory, keeping the upside limited in the short term," comments FXStreet chief analyst Valeria Bednarik.

The USDJPY advanced for second day and extended its bounce from 103.00 and close at 104.60. The pair is trading back to the last two weeks range in between 104.00 and 105.40. The bullish momentum persists in the 4-hour chart as long as "104.10 contains retracements." as Bednarik points.

Main headlines in the American session:

US: Producer price index rises 0.4% in December

US: NY Empire State index jumps to 12.51 in January

Bank of France Dep Gov Le Lorier: Euro foreign exchange level surprisingly high given US growth rates are higher

US oil jumps above $94 on large inventory drawdown

Fed says economy expanded at moderate pace across most of the US

Wall Street rallies for second day amid economic hopes
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