With some markets in Europe closed for the day due to a Bank Holiday, the trading activity following Asia's opening is slow, with the euro and pound trading slightly on the downside, as traders are getting ready for another busy week, with economic indicators out of the US, speeches by government officials and big, bad Ben Bernanke later on.

The current dollar euphoria is rather remarkable, and it makes one wonder where it will lead over the coming months, especially as the US is steadily recovering giving investors a new found confidence in buying the greenback against other major currencies.

The EUR/USD has been trading carefully, with good support levels at 1.2360 ahead of 1.2320 and if the pair manages to hold these levels for now, we may see some kind of further move up towards 1.26. Nevertheless, a break of 1.2320 could see the lowest levels seen last week, around 1.2150, back in the picture. Traders know how risky it is to buy the European currency against the buck and stay long at this point, therefore any attempt to appreciate made by the euro, is always met with plenty of sellers at the top level.

The economic calendar this week has plenty of data to keep us going, with US Durable Goods Orders, New and Existing Home Sales, GDP and unemployment claims, which can give market participants a wider idea as to how the economy is performing now, especially as the Euro zone is still suffering from the ongoing Greek economic crisis. The numbers are expected to be positive for the US economy and this could give way to another wave of US dollar purchases. The fact that the dollar is appreciating with good news is also good for investors who previously bought the US currency as a safe haven asset in order to get out of risky trades and therefore maintain a “safety net” in the eyes of the buck.

Moving on to the Asian markets, they moved higher after opening due to the comments of China's President Hu, who said the country may be moving to a more independent currency reform. Is this linked to US Treasury Secretary Geithner‘s visit to China over the weekend? In another attempt to make the Chinese think twice about their controlled Yuan currency exchange, Geithner said to the press that it is in China's interests to have a more “market driven currency” as that will provide steady growth and keep the nation on the road to prosperity. The point in fact is that whatever the US government, or any other government for that matter, says about the benefits of making Yuan flexible, the Chinese will only comply with a Yuan revaluation for their own reasons.

Gold continues its journey north, with the precious metal moving higher since the market opened. The next resistance level will be 1.200 and if it gives way, gold may continue even higher. As there has been great need for a safe haven asset recently, gold has become the new “comfort” asset, and if the current negative sentiment continues to feed from the Euro crisis, gold may see new record highs and even a new all time high of 1.500 in the coming months.

Let’s see how the Euro and the Pound behave this week against the greenback and whether both pairs can keep support levels at 1.2320 ahead of 1.2280 and 1.43 ahead of 1.4280. The latter levels for the pound are quite important and if they give way, we may see further deterioration for the pair, fueled by expected negative UK economic data...