Read the Daily Forex Trading Analysis

Today’s US Dollar Trading
• USD gets hammered
• US data ignored in favor of rising Oil
• Equities pressure USD/JPY

Overnight Preview
• Look for continued weakness
• USD likely to fall overnight

Looking Ahead to Friday
All times EASTERN (-5 GMT)
• 8:30am USD Core PCE Price Index m/m
• 8:30am USD Personal Spending m/m
• 8:30am USD Personal Income m/m
• 9:55am USD Revised Michigan Sentiment

Summary
The Greenback got hammered today as panic hit the equities markets; Crude Oil passes the $140.00/BBL mark and makes a record close. In my view, this is exactly what the USD needs to reach back into new 2008 lows. If you notice, the USD has been over 5% weaker earlier in the year against Yen and CHF while it is stronger against EURO and GBP; I think it is time to remember that panic doesn’t pay. Look for the USD to drop significantly during the early part of the next quarter but let’s not lose focus; the USD will bottom and recover at some point and with equities this cheap you can bet SWF money will be all over the bid on choice stocks soon. That repatriation will make a firm bottom in the USD this year late in my view. On the day, Cable found a top at the 1.9890 area; high print at 1.9897 tracking EURO higher all day. EURO found stops above the 1.5700 area as expected but also found more above the 1.5750 area stalling at a high print of 1.5766 and remaining firm all day. Both EURO and GBP had willing bids all day and saw lots of dip buying; despite good selling by Asian sovereigns overnight. USD/JPY finally broke under the 107.00 handle finding stops in good size at the 106.90 area; low prints 106.60 making a new two-week low. Forex traders note that volumes were good and trade was orderly suggesting that there were quality bids on the break as well as quality offers. Traders expect further losses near-term to close out the quarter. USD/CHF is under the 1.0230 area for a low print at 1.0219 making a mess of the bull’s balance sheets; expect further losses to end the week. In my view, the USD has broken into expected lows and the big question is if the USD can continue to fall; I think that is a slam-dunk given the high price of Oil. Look for the USD to fall overnight on follow-on selling. No US data tomorrow of note so expect continued pressure during the day and for the USD to finish the week somewhat lower.


EUR/USD Daily

Resistance 3: 1.5820
Resistance 2: 1.5800
Resistance 1: 1.5780
Latest New York: 1.5761
Support 1: 1.5620
Support 2: 1.5580
Support 3: 1.5550

Comments
Rate powers higher on Oil, stops and general USD weakness. Stops above the 1.5700 handle; more stops over the 1.5750 and 1.5780 area but offers will likely cap any further strength near-term. Asian sovereign selling seen overnight. US news today likely to create volatility so be ready for whipsaw or a reversal. Should cable break—EURO could go with it. Watch for model accounts on the bid today or Friday. The 50 bar MA likely to offer support should the rate fall back; close over the 50 bar likely to draw more buying to end the week. Bids will likely be in the 1.5580 area or so on any meaningful correction. Expect higher action this week as late shorts get squeezed.

Data due Friday: All times EASTERN (-5 GMT)

All Day EUR German Prelim CPI m/m
4:00am EUR Current Account
5:00am EUR Consumer Confidence
12:30pm EUR ECB President Trichet Speaks


USD/JPY Daily

Resistance 3: 109.00
Resistance 2: 108.80
Resistance 1: 108.50
Latest New York: 106.71
Support 1: 106.40
Support 2: 106.10/20
Support 3: 105.80

Comments
Rate finally breaks as expected, OK to add on the close for additional weakness. Exporters noted on the offer the past 24 hours and the rate breaks below 107.00 with authority. Failure to close above the 108.00 handle Monday a good sign rate is ready to break back to the lows looking for stops under the 107.10/107.00 area. Exponential reversal signal still valid, rate is two-way but weaker each day. If short—let it work. If today’s US data is weak, expect a pullback again to test support. Look to add if rate can hit the stops in the 107.00 area near-term. Some topping seen; expect volatility. USD likely not this strong but more benefiting from Yen weakness. Stops likely rolled up under the 107.00 area for today so if a break happens—look for a drop to the 106.00 handle fairly quickly.

Data due Friday: All times EASTERN (-5 GMT)


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Daily Forex Analysis

Overnight Asia/Europe
• USD starts firm, weakens into Europe
• Stops triggered on the way down
• Traders report good volume

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 9:45am USD Chicago PMI

Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
• 10:00am USD ISM Manufacturing Index
• 10:00am USD ISM Manufacturing Prices
• 10:00am USD Construction Spending m/m
• Tentative USD Domestic Vehicle Sales
Expect ISM to remain weak.

Summary
The USD started Asia on the defensive as most of the major pairs rallied again to new near-term highs against the Greenback; Cable and EURO finding previous resistance a bit tougher to break and stalling at previous monthly highs. Cable high print at 1.9968 roughly in line with previous highs in the same area from late April and reversing to go negative on the day shortly after the European open. Disappointing UK mortgage approvals put the pressure on Sterling again and the rate made lows just ahead of the US open at 1.9894. EURO made a high print in Asia at 1.5837 before reversing along with GBP; low prints in early New York at 1.5745 before light bids supported the rate off the lows. Both GBP and EURO are tracking each other as cross-spreaders continue to work the Yen side of the crosses; speculation is high that the Yen will continue to weaken against most pairs but today appears to be a profit taking day as the reversals are in all Yen crosses.USD/JPY was pressured into new monthly lows completing a reasonable fib retracement target for a low print in Europe at 104.98 before bids were seen and a short squeeze resulted. The rate has recovered to the 105.60 area in light trade as New York gets underway. Stops reported at the 105.50 area on the way down and again on the way up suggesting late traders are getting whipsawed. USD/CHF dropped in tandem with other USD weakness falling to a low print at 1.0130 before a short squeeze took the rate back over the 1.0200 handle;Forex traders note that across the board in all pairs stops were elected from what appears to be the late USD long. That being said, the probability of additional volatility and likely recovery now that the stops have been run is higher; aggressive traders can look to short EURO above the 1.5770 area and take gains on the Short USD/JPY and USD/CHF positions around current pricing if still in from the weekend. Although the trend is lower for the USD I expect a lot of potential volatility this week and the next thing is to re-short on strength if we get it. Look for the USD to rally into previous resistance across the board and we can re-short it there. Today’s PMI data likely to inspire a bout of volatility.


EUR/USD Daily

Resistance 3: 1.5900
Resistance 2: 1.5880
Resistance 1: 1.5830/40
Latest New York: 1.5768
Support 1: 1.5720
Support 2: 1.5680
Support 3: 1.5650

Comments
Rate not supported by higher Oil today suggesting a near-term top. Stops noted under the previous lows layered under 1.5700 traders say. Closes near the 1.5800 handle from last week, more upside likely but a pullback is needed. Asian sovereign selling seen overnight. US news today likely to create volatility so be ready for whipsaw or a reversal. Should cable break—EURO could go with it. Watch for model accounts on the bid today; those guys love to buy highs. The 50 bar MA likely to offer support should the rate fall back; close over the 50 bar likely to draw more buying to end the week. Bids will likely be in the 1.5580 area or so on any meaningful correction. COT data show a flip to EURO longs; could be a clue for a top.

Data due Tuesday: All times EASTERN (-5 GMT)

3:55am EUR German Unemployment Change
5:00am EUR Unemployment Rate


USD/JPY Daily

Resistance 3: 107.80
Resistance 2: 107.20/30
Resistance 1: 106.50
Latest New York: 105.56
Support 1: 10500/104.90
Support 2: 104.50
Support 3: 104.20

Comments
Rate continues on follow-on weakness, strong bids noted suggesting a whipsaw bounce is coming. Today’s dip under the 105.00 handle lacked conviction and a potential rally may develop early; sell that rally early next week if we get it. In the meantime, OK to liquidate shorts and wait. Exponential reversal signal still valid, rate is two-way but weaker each day. Stops in the 105.80 area cleared overnight; traders note stops were both ways. Cot data show a flip to Yen longs suggesting a bottom is in.

Data due Tuesday: All times EASTERN (-5 GMT)

7:50pm JPY Monetary Base y/y


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Read the Daily Forex Trading Analysis

Today’s US Dollar Trading
• USD loses ground but attempts a recovery
• Stops run
• Volumes moderate

Overnight Preview
• Two-way action likely

Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
• 10:00am USD ISM Manufacturing Index
• 10:00am USD ISM Manufacturing Prices
• 10:00am USD Construction Spending m/m
• Tentative USD Domestic Vehicle Sales

Expect ISM to remain weak.


Summary
The USD is two-way and whippy today after a losing start to the day. Across the board the USD made monthly lows to end the quarter no doubt creating a lot of risk-aversion liquidation ahead of US data and the holiday-shortened trade week. GBP has upside resistance at 1.9960 area challenged more than once on several rallies but each time the market backed off to trade lower. Into the London fix rumors of buy-needs kept the rate firm but once the fix was gone traders sold the rate lower and the GBP made lows for the day at 1.9878; rate continued to whipsaw short-term accounts as the GBP rallied off the low to trade above the 1.9940 area briefly again. For the most part the EURO had a similar day but dropping Oil prices helped to keep the pressure on more-so than GBP. EURO had a high print at 1.5837 but once the highs were in during European trade the EURO settled back to trade lower all day. Forex traders note that in both pairs volumes were moderate and with a lower close likely all offers. USD/JPY remained on the defensive most of the morning but staged a modest recovery after the London fix as well coming close to the overnight highs with a New York high at 106.25 areas. Traders say the rate is likely to remain two-way as Asian sovereigns have an appetite for USD on the dips while exporters are on the offer during any strength. The rate held the 105.00 handle on the morning break suggesting that a rotation higher might be good for a test of the breakdown area around the 107.50 area near-term; should that be the case there is a lot of volatility there. Swissy weakened as well but held lows at 1.0130 which were never challenged in New York trade. USD/CHF likely to weaken more but the rate wants to rotate high and was the only major pair higher on the day today. Loonie rallied as well and cleared the 1.0200 handle briefly suggesting a lot of two-way action is coming. The rate settled back after scoring a high at 1.0215 in two way action. Traders note that volumes were good in all pairs and more two-way action is due across the board. In my view, the Greenback is set to rotate higher ahead of Non-Farm payrolls later in the week. Although whipsaw is likely as well, I think your best strategy is to sell rallies and wait for the upside correction in USD to fail.


EUR/USD Daily

Resistance 3: 1.5900
Resistance 2: 1.5880
Resistance 1: 1.5830/40
Latest New York: 1.5742
Support 1: 1.5720
Support 2: 1.5680
Support 3: 1.5650

Comments
Rate not supported by higher Oil today suggesting a near-term top. Closing lower suggests some selling pressure is developing. Stops noted under the previous lows layered under 1.5700 traders say. Closes near the 1.5800 handle from last week, more upside likely but a pullback is needed. Asian sovereign selling seen overnight. US news today likely to create volatility so be ready for whipsaw or a reversal. Should cable break—EURO could go with it. Watch for model accounts on the bid today; those guys love to buy highs. The 50 bar MA likely to offer support should the rate fall back; bids will likely be in the 1.5580 area or so on any meaningful correction. COT data show a flip to EURO longs; could be a clue for a top.

Data due Tuesday: All times EASTERN (-5 GMT)

3:55am EUR German Unemployment Change
5:00am EUR Unemployment Rate


USD/JPY Daily

Resistance 3: 107.80
Resistance 2: 107.20/30
Resistance 1: 106.50
Latest New York: 106.23
Support 1: 10500/104.90
Support 2: 104.50
Support 3: 104.20

Comments
Rate continues on follow-on weakness, strong bids noted suggesting a whipsaw bounce is coming. Close back over the 106.00 area suggests a rally soon. Today’s dip under the 105.00 handle lacked conviction and a potential rally may develop early; sell that rally if we get it. In the meantime, OK to liquidate shorts and wait. Exponential reversal signal still valid, rate is two-way but weaker each day. Stops in the 105.80 area cleared overnight; traders note stops were both ways. COT data show a flip to Yen longs suggesting a bottom is in.

Data due Tuesday: All times EASTERN (-5 GMT)

7:50pm JPY Monetary Base y/y


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Read the Daily Forex Trading Analysis

Today’s US Dollar Trading
• ISM better than expected
• USD falls to support and then rallies
• EURO fails at resistance

Overnight Preview
• Look for the USD to consolidate in two-way action

Looking Ahead to Wednesday
All times EASTERN (-5 GMT)
• 7:30am USD Challenger Job Cuts y/y
• 8:15am USD ADP Nonfarm Employment Change
• 10:00am USD Factory Orders m/m
• 10:30am USD Crude Oil Inventories
• 11:00am USD Treasury Sec Paulson Speaks
• 12:00pm USD FOMC Member Mishkin Speaks

Summary
The USD is firming into the New York close after remaining two-way all day; US data helped the Greenback a bit as it came in slightly positive. Firming stocks after the weakness early in the day a positive for some pairs as well. Excessive volatility worked against both sides today as most pairs were whipsawed over close to a 100 point range during the day. GBP failed to attracted bids after initially dropping to the 1.9930 area after the highs early in New York at 2.0009; a minor bounce to the 1.9960 area was sold and the rate dialed to hold gains finishing back near the 1.9930 area. Technically the GBP appears to be forming a top as volumes were light and the crosses are correcting lower on the GBP side. EURO had the highs challenged around mid-day after falling back from the 1.5820 area in the morning; lows were set at 1.5722 before a rally extended the highs above the 1.5820 high for another high print at 1.5828 before retreating; EURO dropped back to the 1.5780 area on the close and looks vulnerable to topping as well. Today’s ISM data helped the USD against the majors but was still considered benign, the two-way whipsaw against the GBP and EURO most likely due to oil volatility and equities pricing. USD/JPY held support at the 105.20/30 area with a low print at 105.22 before rallying all day to close back above the 106.00 handle; overnight highs at 106.40 likely to hold further offers with stops layered above. Forex traders note that the Yen crosses will likely drive near-term sentiment in USD/JPY as the US data due out this week is fairly well expected to be USD neutral to unfriendly. Tomorrow’s ADP private payrolls data is highly inaccurate and will likely create volatility but no real direction. The USD is likely to remain under upside bias until the Thursday NFP data but expect two-way action and a lot of whipsaw as the USD corrects higher back to near-term resistance. I would look for the Greenback to rally another two handles before the selling pressure comes on in force again. Expect two-way consolidation again overnight.


GBP/USD Daily

Resistance 3: 2.0080
Resistance 2: 2.0050
Resistance 1: 2.0000/10
Latest New York: 1.9941
Support 1: 1.9880
Support 2: 1.9820
Support 3: 1.9780

Comments
Rate softens during US trade slightly, US data slightly positive for the USD. Stops the main driver over the 1.9970/80 area with more over the 2.00 handle. Traders expect GBP to track EURO on a break. UK housing prices lower than expected had no effect; traders now expect a top to form as the rate had thinner volume on the rally into the reported option defense. Rate fails at high prints near previous resistance so a correction is still developing. Spillover weakness/strength from EURO still likely all week this week. Continue to expect a lot of cross-trading. US data today may create some whipsaw again.

Data due Wednesday: All times EASTERN (-5 GMT)

4:30am GBP Construction PMI
4:30am GBP Housing Equity Withdrawal q/q


EUR/USD Daily

Resistance 3: 1.5900
Resistance 2: 1.5880
Resistance 1: 1.5830/40
Latest New York: 1.5784
Support 1: 1.5720
Support 2: 1.5680
Support 3: 1.5650

Comments
Rate not supported by higher Oil again today suggesting a near-term top. Rally then breaks after attempted highs suggests some selling pressure is developing. Stops noted under the previous lows layered under 1.5700 traders say. Asian sovereign selling seen overnight; along with Swiss selling. US news today likely to create volatility so be ready for whipsaw or a reversal. Should cable break—EURO could go with it. Watch for model accounts on the bid today; those guys love to buy highs. The 50 bar MA likely to offer support should the rate fall back; bids will likely be in the 1.5580 area or so on any meaningful correction. Equities weaker also no help.

Data due Wednesday: All times EASTERN (-5 GMT)

3:15am EUR ECB President Trichet Speaks
5:00am EUR PPI m/m


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Read the Daily Forex Trading Analysis

Today’s US Dollar Trading
• The Greenback whipsaws, ends weaker
• EURO holds 1.5800 handle with conviction
• Volumes lighter

Overnight Preview
• Traders look for a quiet evening ahead of Thursday
• Expect volatility

Looking Ahead to Thursday
All times EASTERN (-5 GMT)
• 8:30am USD Nonfarm Employment Change
• 8:30am USD Unemployment Rate
• 8:30am USD Average Hourly Earnings m/m
• 8:30am USD Unemployment Claims
• 10:00am USD ISM Non-Manufacturing Composite

Summary
The USD whipsawed both bulls and bears today after a surprise ADP report ignites a round of USD selling. Most of the major pairs rallied to test near-term resistance and the Greenback went on the defensive shortly after the news this morning after building a nice base of firmness overnight. Dropping through several support levels the USD found stops and active selling to drive it into previous weekly lows; traders note that volumes were not impressive and suggest that the break may be a bear trap ahead of US and ECB data tomorrow. GBP failed to rally to new highs but tracked EURO higher after the news. Stops above the 1.9920/30 area triggered after shorts took control under the 1.9900 handle briefly this morning. Highs at 1.9977 went unchallenged despite the rally in EURO. Scoring new weekly highs and a new 30 day high at 1.5889 EURO remained bid all day after stops above the 1.5850 area were triggered. Forex traders note that volumes were lighter but can’t argue with the near-term strength. Poor US data is expected tomorrow and a 25 BP rate hike by the ECB is keeping the rate bid. Many traders are sidelined ahead of tomorrow’s news due to the fact that the rate is at the levels it should be at for the hike and poor US news. In my view, the EURO is setting up for a correction lower and today’s strength is possibly a bull trap. Tomorrow will be hard to play as the markets close early in the US after a slew of important fundamentals. USD/JPY looked strong this morning then broke back sharply as the USD was sold across the board; traders note that the rate is a full handle lower than the highs at the open. In my view the USD is having a knee-jerk reaction and USD/JPY is likely to recover into tomorrow’s action. Aggressive traders can look to buy the rate on weakness under the 105.80 area near-term. Swissy and Loonie both broke back to go neutral on the day after scoring important 24 hour highs. In my view, the USD is whipsawing both sides and neither the bulls nor the bears have the upper hand. Expect more volatility on Thursday as the ECB meeting/press conference add fuel to the US data due out about the same time. With an early close it will be a volatile day so if not positioned with a lead it is OK to stay flat and come back next week.


EUR/USD Daily

Resistance 3: 1.5950
Resistance 2: 1.5920/30
Resistance 1: 1.5900
Latest New York: 1.5875
Support 1: 1.5770
Support 2: 1.5720
Support 3: 1.5680

Comments
Rate rallies hard after ADP surprises, stops elected above the 1.5860 area. Rate whipsaws lower then higher and makes highs on light volume ahead of US news tomorrow. Highs were sold aggressively by Asian sovereigns traders say but rate is firm. Lots of stops building under the 1.5770 area and a break lower is likely on whipsaw Thursday. Stops noted under the previous lows layered under 1.5700 traders say. US news tomorrow likely to create volatility so be ready for whipsaw or a reversal. Should cable break—EURO could go with it. The 50 bar MA likely to offer support should the rate fall back; bids will likely be in the 1.5580 area or so on any meaningful correction. Equities weaker also no help.

Data due Thursday: All times EASTERN (-5 GMT)

4:00am EUR Services PMI (p)
5:00am EUR Retail Sales m/m
7:45am EUR Minimum Bid Rate
8:30am EUR ECB Press Conference


USD/JPY Daily

Resistance 3: 107.40/50
Resistance 2: 107.20
Resistance 1: 106.80
Latest New York: 105.97
Support 1: 105.70/80
Support 2: 105.50
Support 3: 105.20

Comments
Rate gives back overnight gains on whipsaw, likely to trade both sides of unchanged tonight ahead of US data tomorrow. Rate firms up on large cross-spreading traders say; look for a push on stops around the 107.00 handle. OK to place a resting order at the 107.50 area to sell the rate. Bids noted at 105.70/80 area suggesting a firm bottom is in near-term. Sell a rally if we get it. Exponential reversal signal still valid, rate is two-way but a correction is coming and should be a low-volume affair. Offers layered to 107.50 some desks report so upside may be labored above the 106.50 area; stops above 106.80 or so. Expect more two-way action overnight ahead of US data.

Data due Thursday: All times EASTERN (-5 GMT)


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.


DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Read the Daily Forex Trading Analysis

Overnight Asia/Europe
•G8 Summit begins
•USD rallies
•Crude Oil lower

Today’s Economic Reports
All times EASTERN (-5 GMT)
•None in the US

Looking Ahead
All times EASTERN (-5 GMT)
•8:00am USD Fed Chairman Bernanke Speaks
•10:00am USD Pending Home Sales
•10:00am USD Wholesale Inventories

Summary
The USD is trading firmer to start New York this morning after a slow start in Asia; traders have been waiting for the return of US trading before large volumes were seen. Cross-spreaders and option defense started the overnight session as EURO/JPY sales initially rallied the majors to highs overnight before the USD began to gain in Europe. Disappointing UK economic data and poor German industrial production numbers pressured both GBP and EURO through the European session knocking both pairs into lows ahead of New York. Cable traded to a low print at 1.9666 as stops fired off under the 1.9700 handle again; traders note that the GBP appears to be trading in a very large triangle/wedge pattern suggesting a lot of potential two-way action over several handles may result. Now that we are in the “summer doldrums” it is possible that the technical picture will remain more viable for short-term traders and it is my view that the GBP will cover a lot of the same ground twice. EURO sold off briefly into stops under the 1.5700 handle for a low print at 1.5610 before solid bids were seen. Forex traders report that model accounts were on the offer with large orders at the 1.5630/40 area; also of note the 50 bar MA comes in today at 1.5582 which may offer support on further weakness. EURO has a strong exponential sell signal from Thursday last week and the rate is likely going to correct into solid support a bit further down in my view. Good quality buys may be seen in the next 24-48 hours. USD/JPY rallied to our limit entry point overnight and aggressive traders should be short at the 107.50 area; high prints so far overnight 107.72 in line with the 200 bar MA. Traders note that the rate has seen quality buys last week from Asian sovereigns who were seen briefly offering the rate above the 107.50 area overnight suggesting that possibly the rate is capped at the 200 bar MA near-term. USD/CHF and USD/CAD also rallied into near-term resistance but failed to trigger quality sell signals just yet. Look for Swissy to be a sell above the 1.0350 area and the Loonie to be a short above the 1.0230/40 area; CAD data due out today may be of help there. In my view, the USD is off to a firm start into resistance; we need to look at the short side of any strength near-term.


EUR/USD Daily

Resistance 3: 1.5780
Resistance 2: 1.5750
Resistance 1: 1.5700/10
Latest New York: 1.5656
Support 1: 1.5600/10
Support 2: 1.5580
Support 3: 1.5550

Comments
Rate drops on stops and aggressive selling; model accounts on the offer traders say around the 1.5630/40 area. Major support at the 1.5580 area and slightly below. Stops elected under the 1.5700 area but option defense reported at 1.5650 area. Highs were sold aggressively by Asian sovereigns Wednesday traders say. Lots of stops building under the 1.5770 area were cleared overnight and a further break lower is likely on whipsaw today. Stops noted under the previous lows layered under 1.5600 to 1.5550 traders say. Should cable break—EURO could go with it. The 50 bar MA likely to offer support should the rate fall back; bids will likely be in the 1.5580 area or so on any meaningful correction. Exponential reversal still valid.

Data due Tuesday: All times EASTERN (-5 GMT)


USD/JPY Daily

Resistance 3: 108.40/50
Resistance 2: 108.20
Resistance 1: 107.80
Latest New York: 107.57
Support 1: 106.80
Support 2: 106.50
Support 3: 106.20

Comments
Upside limited now that rate clears stops ahead of 107.80 area; option defense ahead of 108.00. 200 bar MA likely to cap the rate near term. Rate firms up on large cross-spreading traders say; resting order at the 107.50 area to sell the rate should be filled. Bids noted at 105.70/80 area suggesting a firm bottom is in near-term. Exponential reversal signal still valid, rate is two-way but a correction is coming and should be a low-volume affair. Offers layered to 107.50 some desks report so upside may be labored above the 106.50 area; Expect more two-way action.

Data due Tuesday: All times EASTERN (-5 GMT)

1:00am JPY Economy Watchers Current Index
7:50pm JPY Core Machinery Orders m/m


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Read the Daily Forex Trading Analysis

Today’s US Dollar Trading
•G8 Summit begins
•USD gives back early gains
•Technical trade dominates

Overnight Preview
•Expect two-way action with the USD to cover a lot of the same ground again

Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
•8:00am USD Fed Chairman Bernanke Speaks
•10:00am USD Pending Home Sales
•10:00am USD Wholesale Inventories

Summary
The USD whipsawed traders again today initially coming on the board higher from light overnight trade but then falling off hard to make lows on the day in some pairs. Equities prices fell back after a strong early start underscoring the overall weakness of the US economic situation many feel; the USD is under threat this week as more Equities losses are likely and the G8 will likely not offer any real help to the Greenback near-term. Forex traders note that the G8 summit will be long on rhetoric and short on action with the most likely agreement to be some kind of announcement that the US will open the SPR soon to reduce the price of oil. Should that be the case expect a wild ride for the major pairs as the euphoric rally in stocks, USD, and bonds will likely see a major correction in the major pairs. That not-withstanding, no mention of any help for the USD will likely further accelerate losses into the end of the week. On the day, the GBP started weaker for a low print at 1.9647 but once stocks fell off the GBP rallied along with EURO and reversed a full handle to trade in the 1.9760/70 area after the London fix. EURO also reversed hard after making a low print at 1.5610 the rate rallied to the 1.5724 area after posted a new daily high at 1.5755; stops in both EURO and GBP were noted on the way higher as late shorts got crushed. In my view, day traders had the best clue for a EURO long this morning on the announcement that model accounts were on the offer at 1.5640 area; those guys are almost always a sure bet for a reversal. USD/JPY topped at 107.75 this morning on thin volumes before turning lower; traders note stops at the 107.20 area and 107.00 area helped push the rate to a new daily low at 106.65 before a slight bounce was seen. Closing back over the 107.00 area a pause for the bears and if you have shorts working expect the rate to rally back to the highs before turning lower again. Lots of whipsaw likely the next few trading sessions as USD traders try to make sense of the conflicting rhetoric and fundamentals. Tomorrow’s data likely to be a non-event but expect some volatility around the release of homes sales data. Overnight expect a quiet two-way session with the USD likely to be slightly better in the morning on follow-on volatility.


GBP/USD daily

Resistance 3: 1.9900
Resistance 2: 1.9850
Resistance 1: 1.9820/30
Latest New York: 1.9763
Support 1: 1.9650/60
Support 2: 1.9600
Support 3: 1.9550

Comments
Reversal after the fix as stocks lose ground, stops hunted to the upside. Bids around the 1.9660 area from “large names” cushioning the break; rally clears a lot of weak shorts as the week starts. Traders expect GBP to track EURO this week. Low prints at 1.9660 area attracted some short-covering. Traders now expect a top to form as the rate had thinner volume on the rally into the reported option defense last week and overnight. Rate fails at high prints near previous resistance so a correction is still developing. Spillover weakness/strength from EURO still likely all week this week. Continue to expect a lot of cross-trading. G-8 data may create some whipsaw again.

Data due Tuesday: All times EASTERN (-5 GMT)

7:01pm GBP Consumer Confidence Index
Tentative GBP Halifax HPI m/m
4:30am GBP DCLG HPI y/y


EUR/USD Daily

Resistance 3: 1.5800/10
Resistance 2: 1.5780
Resistance 1: 1.5750/60
Latest New York: 1.5715
Support 1: 1.5600/10
Support 2: 1.5580
Support 3: 1.5550

Comments
Rate rallies back hard on falling stocks and USD malaise, aggressive selling by model accounts at the 1.5630/40 area absorbed as the rate rallies; those guys are gone now so look for the rate to top in the next 24 hours or so. Major support at the 1.5580 area and slightly below. Stops elected under the 1.5700 area but option defense reported at 1.5650 area. Highs were sold aggressively by Asian sovereigns Wednesday traders say and it looks like they will attempt it again this week. Stops noted under the previous lows layered under 1.5600 to 1.5550 traders say. Should cable break—EURO could go with it. The 50 bar MA likely to offer support should the rate fall back; bids will likely be in the 1.5580 area or so on any meaningful correction. Exponential reversal still valid. Looking for a sell on this strength.


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

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Looking Ahead to Wednesday
All times EASTERN (-5 GMT)
10:35am USD Crude Oil Inventories

Light start to the week, traders watching G8 summit closely


Summary
The USD is stronger across the board after a weak start in Asia overnight; volumes have been light all day traders say and technical trade has been the rule. Staying mostly within established ranges the Greenback failed to extend strength with any conviction but rather remained within established recent ranges and covered a lot of the same ground twice. Making new lows after the London fix, EURO remained on the defense all day and fell to a low print at 1.5634 before seeing short-covering from weak shorts. Highs in the rate were an unimpressive 1.5740 making the EURO stuck near-term inside recent ranges. GBP fared a bit better for the bears with low prints at 1.9664 clearing stops under the 1.9700 area again; Forex traders note that cross-spreading for the Yen pairs kept the two-way action alive in Europe as whipsaw in most pairs forced out weak hands overnight. Both EURO and GBP again suffered from weak equities but shrugged off poor US housing data this morning. Dropping a larger than expected 4.7% Pending home sales created a brief flurry of activity but once that was out of the way the EURO and GBP settled into a slow grind lower until minor stops were hit and shorts covered into the break. Technical trade is expected again overnight and tomorrow leaving the majors vulnerable to another dip lower. USD/JPY stalled on the approach to the 107.50 area; high prints with light stops at 107.55 but traders say volumes on the move were almost nil. Option defense and offers are layered ahead of the 107.70/80 area suggesting that the top is in. Asian sovereigns were seen on the offer as well making the USD vulnerable at this level. USD/CHF benefited from cross-trade and general USD bids to score a high print at 1.0343 making for a double top on the daily charts. Again, volumes were light. In my view, a low volume rally into a significant technical area suggests that the majors will reverse again overnight; the question is when will the majors make a sharp move instead of range-trade? In my view, it would be a good idea for traders to consider shorting the USD on any additional strength the next 24 hours. US news due is not market moving in my view and the majors are trading technical. Look for a correction lower tomorrow in the greenback.


GBP/USD Daily

Resistance 3: 1.9900
Resistance 2: 1.9850
Resistance 1: 1.9820/30
Latest New York: 1.9694
Support 1: 1.9650/60
Support 2: 1.9600
Support 3: 1.9550

Comments
Rate remains inside buying wick from yesterday; following EURO lower. Strong sell signal active and aggressive traders can sell the rate on any strength. Bids around the 1.9660 area from “large names” cushioning the break; rally clears a lot of weak shorts as the week starts. Traders expect GBP to track EURO this week. Traders now expect a top to form as the rate had thinner volume on the rally into the reported option defense last week and overnight. Rate fails at high prints near previous resistance so a correction is still developing. Spillover weakness/strength from EURO still likely all week this week. Continue to expect a lot of cross-trading. G-8 data may create some whipsaw again.

Data due Wednesday: All times EASTERN (-5 GMT)

4:30am GBP Trade Balance
5:30am GBP BRC Shop Price Index y/y


EUR/USD Daily

Resistance 3: 1.5800/10
Resistance 2: 1.5780
Resistance 1: 1.5750/60
Latest New York: 1.5654
Support 1: 1.5630
Support 2: 1.5600/10
Support 3: 1.5580

Comments
Rate is failing to attract bids; offers increase on whipsaw after US data. Major support at the 1.5580 area and slightly below. Stops elected under the 1.5700 area but option defense reported at 1.5650 area. Highs were sold aggressively by Asian sovereigns again today traders say and it looks like they will attempt it again on additional strength. Stops noted under the previous lows layered under 1.5600 to 1.5550 traders say. Should cable break—EURO could go with it. The 50 bar MA likely to offer support should the rate fall back; bids will likely be in the 1.5580 area or so on any meaningful correction. Exponential reversal still valid. Looking for a sell on this strength.


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Read the Daily Forex Trading Analysis

Today’s US Dollar Trading
•USD remains two-way, volumes thin
•Majors hold support, USD fails late in the day
•Equities and Energies in focus due to light data

Overnight Preview
•Look for the USD to continue two-way
•Book-squaring ahead of US news possible overnight

Looking Ahead to Thursday
All times EASTERN (-5 GMT)
•8:30am USD Unemployment Claims
•10:00am USD Fed Chairman Bernanke Testifies
•10:35am USD Natural Gas Storage
Claims likely to be main focus tomorrow.

Summary
The USD continued to whipsaw today losing important ground against the majors as the lack of fundamental news kept traders focused on Equities and Energy. Although crude oil prices have stabilized today without a large swing either way, equities continued to soften in two-way action pressuring the Greenback into lows late in the New York session. With little to focus on besides equities and energy, traders were mostly sidelined unless prices moved to a particularly attractive area for most players; desks reported that volumes were very light all day and may have contributed to exacerbating the losses seen. Cable rallied off low prints at 1.9671 to post a new high for the day at 1.9824 but traders again noted thin conditions. Stops in expected areas indeed helped the action but the rate is not expected to continue higher without help. EURO also rallied but stalled again at the 1.5750 area and drew protective option selling ahead of the 1.5770/80 area; high prints at 1.5750 exactly apparently left the option barrier intact near term. Sellers included recent Asian sovereigns traders say suggesting the rate is topped for now. USD/JPY was unable to break the overnight high on whipsaw volatility and fell to new lows as stocks wilted; stops were elected again under the 107.00 handle for a low print at 106.76; Forex traders note that the rate has lots of sell interest on rallies this week suggesting the rate will not be able to break offers resting at 107.70/80 area. USD/CHF also dropped but was unable to uncover resting stops said to be in the 1.0270 area; low prints at 1.0276 drew bids and the rate briefly managed a few hours over the 1.0300 handle into the close; close under the 1.0300 handle today seen as opening the door for further losses this week. Our orders to sell GBP on this rally were filled and new orders for USD shorts are working. Most likely we will need to adjust those orders tomorrow as the Greenback doesn’t look very healthy near-term. Look for more two-way action and a rally by the USD as the two-way action will likely remain ahead of US data in the morning.


EUR/USD Daily

Resistance 3: 1.9900
Resistance 2: 1.9850
Resistance 1: 1.9820
Latest New York: 1.9805
Support 1: 1.9750
Support 2: 1.9690/1.9700
Support 3: 1.9650

Comments
Rate rallies a full handle to breach new highs but volumes light; could be a head fake. Sell signal negated just as the resting order gets filled; expect volatility. Bids around the 1.9660 area from “large names” cushioned the break; short-covering likely igniting the rally. Traders expect GBP to track EURO this week. Traders now expect a top to form as the rate had thinner volume on the rally into the reported option defense last week and early this week. Rate fails at high prints near previous resistance so a correction is still developing. Spillover weakness/strength from EURO still likely all week this week. Continue to expect a lot of cross-trading. G-8 data may create some whipsaw again. Today’s US data likely no factor.

Data due Thursday: All times EASTERN (-5 GMT)

Tentative GBP MPC Rate Statement
7:00am GBP Official Bank Rate


EUR/USD Daily

Resistance 3: 1.5800/10
Resistance 2: 1.5780
Resistance 1: 1.5750/60
Latest New York: 1.5732
Support 1: 1.5630/40
Support 2: 1.5600/10
Support 3: 1.5580

Comments
Eurozone GDP revised lower but rate is unaffected, technical trade and sympathy with Cable remains the main driver. Rally today hits a brick wall at 1.5750. Major support at the 1.5580 area and slightly below. Stops elected under the 1.5680 area overnight but option defense reported at 1.5650 area. Stops noted under the previous lows layered under 1.5600 to 1.5550 traders say. Should cable break—EURO could go with it. The 50 bar MA likely to offer support should the rate fall back; bids will likely be in the 1.5580 area or so on any meaningful correction. Exponential reversal still valid. Oil higher helping to lift a bit.


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Read the Daily Forex Trading Analysis

Overnight Asia/Europe
• Rumors spike the USD higher in Asia
• Stops and option barriers targeted in EURO
• Volumes moderate, maybe a bit larger than expected

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 8:30am USD Trade Balance
• 8:30am USD Import Price Index m/m
• 9:55am USD Prelim U of M Consumer Sentiment

Looking Ahead to Monday
All times EASTERN (-5 GMT)
• No reports due on Monday
No real news until PPI on Tuesday

Summary
The USD was off to a quiet start in Asia last night as traders prepared for an uneventful overnight session ahead of US and European data. A brief flurry of USD strength was seen when rumors that the US Government may bail-out troubled Freddie Mac and Fanny Mae mortgage companies. The USD rallied to the best levels of the day quickly but as the rumor could not be confirmed the Greenback returned to pre-rally levels. Eurozone data was uninspiring as was UK data and both the EURO and the GBP remained contained to Asian ranges until the late European session. At the start of New York trade the Greenback came under selling pressure as French names were seen buying EURO for a Middle Eastern official; traders say stops and option barriers were targeted with the EURO making a high print at 1.5827 before dropping back under the 1.5800 handle. Traders also note that model accounts were on the bid over the 1.5800/10 area suggesting that a top might be in near-term. GBP followed EURO higher but offers were thick on the approach to 1.9800 handle and the rate could only manage a high at 1.9796 before dropping back. Stops for both pairs are likely in range but under the day’s lows so US data today may excite some fireworks. USD/JPY is a bit whippy this morning extending Asian highs to 107.31 before turning lower with other USD pressures for a low print at 106.89; all action still within recent ranges and a lot of two-way action appears on the board to end the week. No real news out of the Asian rim the past few days and the rate appears to be drifting a bit with most action contained to cross-spreaders who are content with current ranges. USD/CHF has been two-way as well overnight; high prints at 1.0306 with lows at 1.0242; a new weekly low but bids were waiting ahead of rumored stops at the 1.0230/40 area. HSBC bank suggested overnight that the CHF is no longer a “safe haven” currency pressured the USD higher a bit but the rate is tracking weakens to start New York. Loonie has dropped a bit and the USD has traded off recent weekly support suggesting that the recent range will hold and a rotation to the upside is coming. Forex traders expect that today’s US data will likely help the USD/CAD so a pop over the 1.0220 area again may be our sell opportunity. Look for the US trade Deficit to come in benign and a short-covering rally in the Greenback.


GBP/USD Daily

Resistance 3: 1.9900
Resistance 2: 1.9880
Resistance 1: 1.9840/50
Latest New York: 1.9802
Support 1: 1.9750
Support 2: 1.9700/10
Support 3: 1.9660

Comments
Rate spikes to new high, follows EURO higher but rate still inside range. Bids around the 1.9660 area from “large names” likely still there; short-covering rally after lower end of range failed to attract further selling. Traders expect GBP to track EURO this week. Traders now expect a top to form as the rate had thinner volume on the rally into the reported option defense last week and early this week. Continue to expect a lot of cross-trading. Rate trapped for now, US data may help a breakout.

Data due Monday: All times EASTERN (-5 GMT)

4:30am GBP PPI Input m/m
4:30am GBP PPI Output m/m
7:01pm GBP BRC Retail Sales Monitor y/y


EUR/USD Daily

Resistance 3: 1.5880
Resistance 2: 1.5850/60
Resistance 1: 1.5830
Latest New York: 1.5823
Support 1: 1.5750
Support 2: 1.5700/10
Support 3: 1.5660

Comments
Rate has a short-squeeze as stops above the 1.5800 area trigger. Model accounts on the bid traders say, selling from solid sources unable to contain the rally so far. Technical trade and sympathy with Cable remains the main driver. Close over the 1.5750 area argues for potential advance but expected sellers on approach to the 1.5800/20 area again overnight. Major support at the 1.5580 area and slightly below. Stops likely under the 1.5680 area but option defense reported at 1.5650 area. Stops noted under the previous lows layered under 1.5600 to 1.5550 traders say. Should cable break—EURO could go with it. The 50 bar MA likely to offer support should the rate fall back; bids will likely be in the 1.5580 area or so on any meaningful correction. Exponential reversal still valid. Oil higher helping to lift a bit. Equities also may drive a bit today.

Data due Monday: All times EASTERN (-5 GMT)

5:00am EUR Industrial Production m/m


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.