By CountingPips.com
The U.S. dollar continued its gain versus the euro in the forex markets this week while the dollar’s overall performance was mixed against the other major currencies. The U.S. currency rose versus the euro, British pound, Japanese yen and 
the Swiss franc in the week that ended February 19th, according to currency data from Oanda. Meanwhile, the dollar fell against the Canadian, Australian and the New Zealand dollars for the second straight week.
The dollar’s rise versus the euro marked the first six week gain in almost a decade although the week’s 21 pip increase was the smallest of the last six weeks. The Greek debt crisis and the uncertainty surrounding a potential bailout helped keep the euro under pressure for most of the week. On Monday, European Union officials reiterated their support for the debt-ridden nation but also gave the country one month to formulate a plan to help cut its deficit. One of the euro’s original advocates, Robert Mundell, didn’t do the euro any favors on Tuesday when he stated that Italy, not Greece, was the biggest threat to the euro. See the video.
Futures bets against the euro increased to a record high for the third straight week as of February 16th, according to the Commitments of Traders (COT) data released on Friday by the Chicago Mercantile Exchange. Non-commercial futures positions, those taken by hedge funds and large speculators, were net short the euro against the U.S. dollar by 59,422 contracts after being net short the euro by 57,152 contracts the week before. Net short euro positions have increased for five consecutive weeks.
The COT report is published every Friday by the Chicago Mercantile Exchange and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in 
the direction of a currency or commodity.
The largest gain for the dollar this week was against the British pound with a 229 pip increase followed by the 158 pip advance versus the Japanese yen (see chart). The dollar declined by over 100 pips against the Canadian dollar and the Australian dollar while showing a small 19 pip deficit to the New Zealand dollar.
Market news that helped push the dollar higher on Thursday was the Federal Reserve’s raising of the discount rate that the government charges for loans to banks. The discount rate was increased from 0.50 percent to 0.75 percent as the move was intended to spur a “further normalization of the Federal Reserve’s lending facilities.
According to the Fed statement, the change was “in light of continued improvement in financial market conditions” but cautioned against thinking this move was a change in monetary policy or a shift in stance on main interest rate. Despite the Fed’s word of caution, the move prompted speculation that this was a first step in the direction of an overall normalization of monetary policy and towards ending its special stimulus programs.
Next week’s economic calender highlights include the S&P/Case-Shiller Home Price Index and U.S. Consumer Confidence on Tuesday. The German Gross Domestic Product and U.S. New Home Sales are released on Wednesday. Thursday releases include Switzerland’s Employment Level, Germany’s Unemployment Change and U.S. Durable Goods Orders. Friday has the U.K. and U.S. Gross Domestic Product reports as well as U.S. Existing Home Sales and Canada’s Current Account data.
Have a great weekend!
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