By CountingPips.com
The U.S. dollar reversed course from yesterday downtrend in the forex markets to gain against the other major currencies today. The dollar has been advancing today versus the euro, Swiss franc, British pound, Canadian dollar, Japanese yen, 
New Zealand dollar and the Australian dollar as of 2:27 pm EST according to currency data by Oanda.
The U.S. stock markets have had a positive session today after yesterday’s rise with the Dow Jones gaining by roughly 30 points, the Nasdaq increasing over 5 points and the S&P 500 showing a 3 point gain. Oil and gold have both been almost unchanged as oil sits at the $77.05 level while gold trades around $1119.30 per ounce.
Yesterday, the dollar was on the defensive as the euro surged sharply higher as many speculated that the euro’s recent decline may have been overdone. Today’s market action appears to show that traders used yesterday’s higher euro level as an attractive point to enter into a euro short position (shorting the EUR/USD). The euro has fallen over 150 pips today (at time of writing) to almost erase all of yesterday’s gains.
The EUR/USD touched a high this morning at the 1.3788 exchange level before a sharp decline brought the pair to the 1.3600 level where there has been buying support and has halted the steep descent. On the eurozone debt situation that has been pressuring the European currency, BusinessWeek quoted noted economist and the so-called “father of the euro” Robert Mundell as saying that Italy is the “biggest threat” to the eurozone. Italy is the eurozone’s fourth largest economy but has the second largest debt in the union. See the full BusinessWeek Story.
US Housing data is mixed in January
Economic news out of the U.S. today showed that housing starts increased in January to the highest level since July 2009 while housing completions and building permits fell, according to data released by the Commerce Department on new residential construction. Housing Starts rose by 2.8 percent in January to a seasonally adjusted annual rate of 591,000 starts following an annual rate of 575,000 in December. January’s data was better than the economic forecasts that were predicting a rise for the month to a 580,000 starts pace.
Building permits statistics, used as a predictor of future construction, showed a seasonally adjusted annual rate of 621,000 permits in January which is a decrease of 4.9 percent when compared to December. Building permits virtually matched forecasts that were expecting permits to number approximately 620,000 annually.
Housing Completions for January decreased when compared to December as completions fell to an annual rate of 659,000 privately-owned housing completions. This is a decline of 12.4 percent from December’s completion totals.
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