The U.S. dollar is currently heading for its worst week against the single European currency since the inception of euro on the market’s prolonged reaction to the Fed’s pledge to increase dollar liquidity.

The dollar is currently ready to renew its more than 2-month low against the euro, which was set yesterday. The spree of bullish days on EUR/USD lasts for 9 days already and the Forex market doesn’t seem to stop soon with this growth. On March 18 the Fed stated that it will spend more than $1 trillion to stimulate economy with $300 out of those money will probably be printed.

The greenback also declined for the third day against the Japanese yen, which also received some major hit from the euro on the stock markets revival. The currency market analysts regard the fact that the Federal Reserve is printing the money in order to help the economy as an extremely strong bearish factor for the dollar.

EUR/USD rose from 1.3656 to 1.3718 as of 7:50 GMT today or a total of 6.8 percent this week. USD/JPY fell from 95.54 to 94.33, while GBP/USD went up from 1.4495 to 1.4561 today.

The euro fell against the dollar and the yen today following the yesterday’s unprecedented rally as the market participant speculate that ECB will have to follow Fed’s money-printing trend.

The European currency rallied yesterday against the U.S. dollar after the Federal Reserve pledged to buy $300 billion in the U. S. Treasury securities, technically stating that it will print those money. The euro advanced by more than 3.4 percent against the greenback yesterday. Today it’s posting a technical correction supported by the expectations that the next statement by the European Central Bank won’t differ much from the Fed’s one.

The currency rose against the pound, which is considered to be a rather weak player on the currency market (it failed to rally at similarly fast pace against the dollar yesterday). The yen gained for the first time in 6 days against the euro today. Analysts believe that there is a great chance for the ECB to follow Fed’s steps and we may see a backward rally on EUR/USD soon — the next monetary policy meeting for Eurozone is scheduled for April 2.

EUR/USD fell from 1.3490 to 1.3476 as of 7:54 GMT today after rallying from 1.3035 to 1.3490 yesterday. EUR/JPY declined from 129.74 to 128.61 and EUR/GBP rose from 0.9442 to 0.9457 today.

The Great Britain pound declined against the other major currencies today on speculations that the employment report that is scheduled for the release today will show that the situation with labor market is worsening.

Despite the continued gains on the global stock markets and the elevated interest for the high-yielding assets, the pound sterling fell for the first day in five against the Japanese yen and continued its yesterday’s moderate decline against the U.S. dollar and the euro. The market participants expect an increased number of the jobless claims in U.K. from the report that’s released today at 9:30 GMT.

Bank of England Governor Mervyn King said during its late yesterday speech in London that the positive outlook for the consumer price growth may turn the monetary policy back to the bullish trend in the interest rate. Analysts saw this statement as a positive signal for the pound but it looks like the markets aren’t sure about the positive CPI numbers appearing on the horizon soon.

GBP/USD fell from 1.4055 to 1.3966 as of 7:49 GMT today. GBP/JPY went down from 138.73 to 137.66, while EUR/GBP rose from 0.9271 to 0.9305 today.

The Australian dollar reached the new monthly maximum the Japanese yen as the stock markets signaled growth for a third day on improved earnings of the banks.

The currency experienced a minor decline during the day as the markets reacted on the RBA minutes stating the necessity of the further interest rate cuts. But then the growth followed. The Aussie also fell against the New Zealand dollar as the gain in commodities market made the NZD look more promising than than its Australian counterpart.

The analysts talk mainly about the good news from the U.S. banking sector as the primary reason for the global stock and high-yielding optimism. Some are afraid of the further rate cuts and say that the current optimism can’t last for too long and the Australian dollar has now some considerable space to fall. When the optimism is over, the crude oil will start to pare its gains and the Aussie will have to step back against other currencies.

AUD/USD is currently trading near its open level at 0.6583 as of 13:52 GMT after almost reaching new monthly high at 0.6615. AUD/JPY rose from 64.74 to 65.03 after peaking at 65.39 — the highest level since January 8. AUD/NZD fell for sixth day in a row — from 1.2442 to .12424. NZD/USD rose from 0.5288 to 0.5300, while NZD/JPY went up from 51.96 to 52.59 today.

The yen declined for the third day in a row against the dollar, the euro and the pound today as the Bank of Japan decided to buy the government debt and the stock markets rose during the Asian trading session.

The G20 meeting resulted in a pledge to a collective easing of the monetary policy and fiscal stimulating of the economies to recover from the ongoing crisis. The markets reacted to this decision with an expected growth, which is always negative for the Japanese yen and the U.S. dollar, as investors continued to seek the assets that would yield more than the near-zero dollar and yen.

According to the general expectations of the market participants the monetary easing will lead to the strengthening of the currencies of the leading emerging currencies in the near term, while the low-yielding U.S. dollar and Japanese yen will have to go down. On the other hand the dollar will probably also rise against the yen, providing the yen will become the short-term carry trade target again.

EUR/JPY rose from 126.02 to 126.81 as of 7:35 GMT today. GBP/JPY went up from 136.45 to 137.83 today. USD/JPY remains virtually unchanged, floating near the rate of 98.05.

The New Zealand dollar propelled to the monthly high against the U.S. dollar today, rising for the second day, as the stock marked continued to grow globally, improving the appeal of the higher yielding currencies.

The Australian counterpart of the NZD also rose today against the other major currencies but not at such a fast pace as the New Zealand dollar. The commodity price also went up significantly yesterday, increasing the competitiveness of the regional exporting economies. Yesterday the Reserve Bank of New Zealand decreased the official cash rate to the record low 3 percent (from 3.5 percent) and said that the rate reduction pace will slowdown.

The New Zealand currency also rose for a second day against the Japanese yen, reaching the 2-month high against it, as the risk-aversion declined significantly yesterday on the global economic optimism. The kiwi (as the NZD is sometimes called) advanced for the fourth day against the Aussie today.

Some analysts believe that it’s only a temporary correction from the pessimism that ruled the markets during the last several months. Banks’ shares are rising so are the other equities and it’s natural for the investors to dump the low-yielding yen and dollar for the more promising currencies. The short-term outlook for the Australian and New Zealand dollars is bullish.

NZD/USD rose 0.5184 to 0.5241 as of 9:18 GMT today after reaching as high as 0.5266 — the highest level since February 13. NZD/JPY went up from 50.64 to 51.52 with a daily maximum at 51.84 — the highest since January 12. AUD/NZD fell from 1.2555 to 1.2546 with the daily minimum at 1.2499 — the lowest level since February 19.

The Japanese yen rose against the U.S. dollar for the third day in a row today as the global recession boosted the demand for the «safe haven» currencies, decreasing the attractiveness of the high-yielding assets.

The yen also advanced significantly against the euro and the British pound that are vulnerable both to the yen and the dollar during the times of the risk-aversion. The popular high-yielders — Australian and New Zealand dollars — also fell against the Japanese currency after the final Q4 report for 2008 showed that the country’s economy declined at a fastest pace since 1974.

The latest Japanese report on GDP, while being obviously bad for Japan, is even worse for the other countries as it signals that extremely bad conditions will hurt every economy. More than that, this report was also positive for Japanese yen as the revised GDP change was slightly better than expected. Analysts believe that the global economic conditions will continue deteriorating this quarter.

USD/JPY fell from 97.42 to 96.06 as of 9:56 GMT today. EUR/JPY declined from 124.90 to 122.86. GBP/JPY went down from 134.88 to 132.46 today — the fourth bearish day for this currency pair.

The yen rose today against the other major currencies on Forex as the China’s exports declined at a record fast pace and the largest Swiss bank reported an increased loss.

According to the China’s customs bureau’s report the country’s trade surplus declined to the lowest level since February 2006; UBS reported $18 billion loss for the year 2008. After that the Japanese yen gained mostly against the U.S. dollar and the New Zealand dollar but earlier during the trading session it was reaching the high levels mainly against the high-yielders.

The uptrend on the dollar/yen pair reached a resistance level near the rate of 100 and failed to break it. The current strength of the yen is derived from that failure. The analysts believe also that the correction in the risk-aversion that was active during the last two-weeks is probably over now and the «safe haven» currencies will continue to rally soon.

USD/JPY went down from 98.69 to 98.49 as of 11:14 GMT today after reaching as low as 98.24 earlier today. EUR/JPY fell from 125.38 to 125.24, while GBP/JPY declined from 135.88 to 135.76 after falling as low as 134.38 today.

The South Korean won rose for the third day against the U.S. dollar today as some Asian stock markets showed the growth and the high-yielding currencies were favored by the traders.

The majority of the most-traded Asian currencies (except the Japanese yen) showed gains today that can be simply regarded as the correctional movement after one of the worst beginnings of the year. The Korean KOSPI composite index advanced by almost 2 percent today as the investors thought that it was largely oversold recently.

Some analysts go as far as stating that the current month will be the final really bad one for the emerging markets and beginning from April the things will be gradually improving for them. The South Korean won trading near 1,500 per dollar looks very promising if you consider a global recovery soon. The currency was just a good buy, which was supported by the growing stocks today.

Until today there were speculations that the Korean foreign exchange reserves aren’t liquid enough to supply the U.S. dollars whenever the demand arises. The Bank of Korea informed the market participants today that the reserves can be turned into cash anytime to satisfy the demand for dollars if required. More than that, the last currency auction was skipped due the diminishing demand for the greenback.

USD/KRW fell from 1537.5 to 1510.6 as of 6:00 GMT today. It was reaching as high as 1559.0 yesterday.

The British pound fell against all major currencies today on the concerns that the United Kingdom’s largest bank will have a disastrous time handling the bad loans of its United States unit.

The U. K. currency declined against the dollar and the euro as both the U.K. FTSE 100 benchmark index and the Japanese Nikkei 225 dropped during the late Asian and early European stock market sessions. The additional government help to the banking system will be needed to keep the financial system afloat in the United Kingdom. HSBC, the Britain’s largest bank, declined by 18 percent today.

The currency analysts link the pound’s weakness directly to the country’s banks and the general stock market indexes. The British government has always been eager to give out the money to their banks and this giveaway policy can’t go without increasing the monetary base, which leads to the currency depreciation.

GBP/USD fell from 1.4126 to 1.3883 as of 11:00 GMT today. EUR/GBP rose from 0.8970 to 0.9065, while GBP/JPY declined from 138.78 to 137.29 today.