This week, Federal Reserve Chairman Alan Greenspan is schedule to testify before Congress on the state of the economy. Currency traders are already trying to forecast the impact this testimony will have on exchange rates. They will be watching Greenspan, to see if he foreshadows changes in American interest rates. Many traders are anticipating good news about the current account and trade imbalances, which they believe will accelerate the dollar’s recent rally against the Euro. Others expect the exchange rate will improve irrespective of Greenspan’s testimony, due to technical factors. FXStreet.com reports:

The euro’s steep fall against the dollar in January "suggests (that) the probability of another extended move lower by euro/dollar (i.e. 5 percent) in the coming weeks is slim, especially since there is no new information to suggest the dollar’s downtrend should be over," said analysts at ABN AMRO in a research note.

Read More: FOREX-Dollar steady against euro; market eyes Greenspan