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The dollar gained 0.6% versus the euro to trade at $1.4740, its highest in over a month. The greenback was up 0.9% against the U.K. pound at $1.6292.
Despite the recent weakness, gold has rallied over the last few months, hitting a series of all-time highs in November, as traders bet the U.S. dollar will remain weak for a long time.
But investors began to reconsider the outlook for the dollar on Friday following a much better-than-expected report on the U.S. labor market.
"When the market sees signs of strength in the economy, it interprets it as giving room for Fed to raise rates and support the dollar," Foster said.
The Federal Reserve has slashed interest rates to historic lows near zero percent to help bring about an economic recovery. As a result, the U.S. dollar has depreciated significantly against rival currencies this year.
A weaker greenback tends to support prices for commodities like gold that are priced in dollars around the world.
Fed officials have repeatedly said that interest rates will remain low for an extended period as the economy slowly recovers. On Monday, Fed Chairman Ben Bernanke said the recovery continues to face "formidable headwinds" and reiterated that inflation is not a deep concern.
Gold prices fell for the third day in a row on Tuesday as the U.S. dollar continued to strengthen.
February gold fell $32 to settle at $1,131.40 an ounce. Gold prices have tumbled 7% since hitting an all-time high of $1,218.30 on Thursday.
The retreat came as the U.S. dollar regained ground against rival currencies, undermining demand for gold as an alternative investment.
"The dollar is strong today, and gold has been trading against the dollar," said Joe Foster, portfolio manager for the Van Eck Global International Investors Gold Fund. He said prices could continue to decline for the next few weeks before climbing anew next year.
The dollar gained 0.9% versus the euro to trade at $1.4693, its highest in over a month. The greenback was up 0.1% against the UK pound at $1.6274.
Dollar Rally Continue?
Dollar Rally Continue?
We went right to the point on Tuesday where resistance would kick in, 1.4770-1.4780, and it went right to 1.4780 but could not get above. This has set up a bearish formation on the short term charts. Unless that resistance area is taken out, and ultimately 1.4900, the eur/usd is in correction.
That of course does not mean there can't be a move higher...there can, and it may still fall short of 1.4900. Movement above 1.4780 is likely to target 1.4820, 1.4840 (both of these are minor resistance points) and if it continues then 1.4860. Movement above this point will run at the former swing highs at 1.4890-1.4900.
Short-term trend is down and first minor support comes in at 1.4720 with a drop below targeting 1.4700. No real confirmation of a further decline comes until the rate moves below 1.4660. This would target 1.4625 followed by 1.4600-1.4580. 1.4560 and 1.4530 provide support beyond if the pair continues to fall.
Trade Balance and Unemployment Claims due of the US at 13:30 GMT.
Forex trading analysis written by Cory Mitchell, CMT for Forexpros.
Once their files are complete, borrowers may be denied long-term help if they don't meet the program's criteria.
At JPMorgan Chase (JPM, Fortune 500), for instance, some 29% of borrowers offered trial plans did not make the required payments and are not eligible for permanent modifications, the bank reported. Another 51% have made the three required payments but have not provided all the needed paperwork.
The bank has launched a program to call borrowers 36 times, reach out by mail 15 times and make at least two home visits to retrieve the required forms.
About 20% have met all the criteria and the majority are expected to be put in long-term modifications soon, the bank said.
So far, some 4,302 borrowers at Chase have received permanent modifications, while another 16,131 have been approved for long-term help. The servicer has offered trial modifications to 199,033 borrowers.
"We continue to work very hard to convert customers from a trial modification to a permanent modification that lowers their monthly payment, but it has been a struggle," said Charlie Scharf, head of retail financial services at Chase.
Technical analysis 11/12/09 of FXCBS
This is technical daily and provided by specialists and analysts from the company FXCBS
Previous session overview
The Euro against the U.S dollar traded in a narrow range between the highest price at 1.47407 and the lowest price at 1.47089 during the Asian session, the pair is trading now at the level 1.47301.
Sterling rose against the U.S dollar during the Asian session to achieve the highest price at 1.63329, the pair is trading now between the levels of 1.63220 and the level 1.62600.
Finally the dollar against the yen also rose significantly during the Asian session to achieve the highest price at 88.953, the pair is now trading at the level 88.789.
Market Expectations
EUR/USD :
We expect today that the Euro against the U.S dollar will rise to the level 1.48100 , this expectations requires the stability of the trading above the level 1.47000 and close four hours candle above that level , trading range for today is among the support key 1.45600 and the resistance level at 1.49040.
GBP/USD :
We expect today that the pair sterling against the U.S. dollar will rise to achieve the target of 1.64650 with possibility to reach the level of 1.66100, This is after limited trading during yesterday's session to draw a triangular movement. With the observation that the general tendency downward unless we close the day above 1.66100.
USD/JPY :
Stochastic indicator appears saturated in the procurement process for the pair U.S. dollar against the yen which may lead a pair to corrective movement to get rid of this determination , but the general trend for the pair is rising towards to the 90.25 and 91.25.
Senior Analyst / Ali Hasan / FXCBS
Republic Federal Bank was closed Friday by federal regulators, bringing the total number of U.S. failed banks this year to 131, the Federal Deposit Insurance Corporation said.
The four offices of the Miami-based bank will reopen Monday as branches of 1st United Bank, which is based in Boca Raton, Fla.
Customers of the failed bank are protected. The Federal Deposit Insurance Corp., which has insured bank deposits since the Great Depression, currently covers accounts up to $250,000.
1st United will acquire all of the failed bank's $352.7 million deposits. It will also buy $267.1 million of the $433 million worth of assets Republic Federal had on its books as of late September.
The FDIC said customers can access their money over the weekend by writing checks or using ATMs or debit cards. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.
Customers should continue to use their existing branch until they receive notice that the takeover has been completed, the agency said.
An average of 11 banks have failed per month this year, and the federal agency's deposit insurance fund has slipped into the red for the first time since 1991.
As of the end of September, the fund was $8.2 billion in the hole. But that figure includes $21.7 billion the agency has earmarked for future bank failures.
The failure of First Republic will cost the FDIC an estimated $122.6 million.
Technical analysis 14/12/09 of FXCBS
This is technical daily and provided by specialists and analysts from the company FXCBSPrevious session overview
The dollar rose against the Euro during the Asian session to achieve the highest trading level of 1.46835 and the lowest trading level of 1.45971, the pair is now trading around the level 1.46559.
The Sterling pair also rose against the U.S dollar during the Asian session to achieve the highest price at 1.63254 and the lowest price at the level 1.61899, the pair is trading around the level 1.62455.
Finally the dollar against the yen dropped sharply during the Asian session, the pair has reached the lowest level of 88.379, and trading now around the level of 88.697.
Market Expectations
EUR/USD :
Euro fell against the U.S. dollar at the end of trading on Friday at the previous week to achieve the lowest at 1.45852, we expect to this day that the pair will make a corrective to the level 1.47450, and then relapse again down towards to the target 1.45000 and then 1.44250.
GBP/USD :
Sterling fell against the dollar at the end of trading at the previous week without achieving a new target, the pair touched the level 1.61910, so we expect today a volatility around that level and then a corrective movement to the level of 1.63800 and then back down again, the general trend outlook is heading towards the target of 1.5980.
USD/JPY :
We expect today that the pair U.S dollar against the Japanese Yen will fall to the level 87.500 after the pair breakthrough the level 88.350 , we expect that the general trend for the pair goes down to the level 85.000.
USD/CAD :
We expect that the pair will make a downside correction to the level 1.50250 as maximum, and then goes up to the level 1.07000, these expectations require stability of trading above the level of 1.04900.Senior Analyst / Ali Hasan / FXCBS