The dollar was mixed at lunch time of the European trading session with the Swiss franc strengthening broadly on safe haven bids. US inflationary data along with weekly unemployment numbers are due up shortly.
Following yesterday's Fed Meeting Minutes release which showed the Fed's upbeat tone for the US economy, the dollar shed its gains versus the major currencies. Spurring the shift in sentiment was news of Iranian war ships sailing for the Suez Canal in route to Syria.
Safe haven bids were seen as traders moved into the Swiss franc on news of the ships movement. The franc gave back some of its gains following the Iranian decision not to sail the ships, but bids for the franc remain strong both against the dollar and the euro.
The EUR/USD is currently trading down at 1.3545 after opening the day at 1.3579. The EUR/CHF is down at 1.2965 from 1.3020, while the USD/CHF is lower at 0.9570 from 0.9588.
Traders will now turn their attention to economic data due out from the US this afternoon with the release of US Core CPI and weekly unemployment claims at 13:30 GMT. Expectations are for a stable Core CPI with a rise of only 0.1%. Unexpected inflationary pressures would be a catalyst for the greenback.
EUR/USD support is found at Monday's low of 1.3430, followed by the rising trend line from the June 2010 low which comes in today at 1.3050. Resistance is located at last night's high of 1.3610, a level that coincides with the current trend line falling from the January/February highs.
Also expected this afternoon is testimony from Federal Reserve Chairman Ben Bernanke who is set to testify in front of the Senate Banking Committee. The Fed's tone in yesterday's meeting minutes was more optimistic than expected as the central bank forecasts the US economy to grow between 3.4% and 3.9%. As such, traders may be looking for rising US rates or for the Fed to end the QE II program prior to the full purchase of $600B worth of government securities. Both events would be dollar supportive.