Read the Daily Forex Trading Analysis

Overnight Asia/Europe
•USD two-way
•UK and Eurozone news push those lower
•Technical trade likely to continue

Today’s Economic Reports
All times EASTERN (-5 GMT)
•No reports due on Monday
No real news until PPI on Tuesday.

Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
•8:30am USD Core Retail Sales m/m
•8:30am USD PPI m/m
•8:30am USD Retail Sales m/m
•8:30am USD Core PPI m/m
•8:30am USD Empire State Manufacturing Index
•10:00am USD Fed Chairman Bernanke Testifies
•10:00am USD Business Inventories m/m
•10:00am USD IBD/TIPP Economic Optimism

Summary
The USD is back on the offensive this morning after disappointing economic news from the Europeans plus comments from the US RE: a Freddie/Fanny bailout encouraged traders to buy USD overnight. UK Producer Inflation hit double-digits in May and the GBP fell as speculation rose that the economy would slow more in coming months; traders note that more weight given to USD strength and EURO data than domestic news overnight. Forex traders bought USD across the board overnight once it was confirmed that the US intends to aid both Freddie Mac and Fanny Mae to prevent further declines in housing and economic slowdown. In my view, the aid is probably going to help but the overall volumes and upside seen in the USD looks more like a “knee jerk” reaction than a change in sentiment. Although EURO scored solid highs late last week and attempted to add to those gains today the rate fell on an unexpected drop in EMU Industrial Production; falling 1.9% last month. EURO dropped to a low print at 1.5840 after Russian and Swiss names were seen selling along with hedge funds. GBP dropped in sympathy with EURO for a low print after all the news at 1.9714 before recovering back near the closing range for Friday. USD/JPY and USD/CHF both rallied as the USD gained strength during the Asian session for highs in late Europe; USD/JPY found light stops for a high print at 106.82 while USD/CHF found stops as well but only managed a high at 1.0253. Both pairs have more stops above the market traders say but offers are expected to cap ahead of last week’s highs. In my view, the USD has traded more two-way and within range following through from last week and is not set to break out of those ranges early this week. Likely that it will take news due tomorrow and later to push trader’s perception that a correction in the USD is under way. Look for more technical trade the next 24 hours as traders adjust positions for smaller gains and whipsaw.


EUR/USD Daily

Resistance 3: 1.9980
Resistance 2: 1.9950/60
Resistance 1: 1.9920/30
Latest New York: 1.9871
Support 1: 1.9800/10
Support 2: 1.9750/60
Support 3: 1.9700/10

Comments
Rate little changed but sellers in control to start; follows EURO higher, stops above the market cleared Friday and volumes dried up. Bids likely under the 1.9800 area to support near-term but sell signal is active; traders report a lot of stops building under the 1.9790 area. Traders expect GBP to track EURO through this week. Traders now expect a top to form as the rate had thinner volume on the rally last week into the reported option defense last week. Continue to expect a lot of cross-trading.

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

4:30am GBP CPI y/y
4:30am GBP Core CPI y/y
4:30am GBP RPI y/y


EUR/USD Daily

Resistance 3: ?
Resistance 2: 1.6000/10
Resistance 1: 1.5980
Latest New York: 1.5844
Support 1: 1.5820/30
Support 2: 1.5780
Support 3: 1.5750

Comments
Rate has a short-squeeze last week as stops above the 1.5800 and 1.5880 area trigger; model accounts on the bid Friday traders say. Selling from solid sources capped rally Monday. Technical trade and sympathy with Cable remains the main driver. 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 but those are now out of range. 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 volatility helping to whipsaw the rate.

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

5:00am EUR German ZEW Economic Sentiment
5:00am EUR ZEW Economic Sentiment


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 two-way within established ranges
•News is light, volumes too
•Technical trade dominated all day

Overnight Preview
•Look for quiet conditions
•Tests of S/R to cause a rotation

Looking Ahead
All times EASTERN (-5 GMT)
•8:30am USD Core Retail Sales m/m
•8:30am USD PPI m/m
•8:30am USD Retail Sales m/m
•8:30am USD Core PPI m/m
•8:30am USD Empire State Manufacturing Index
•10:00am USD Fed Chairman Bernanke Testifies
•10:00am USD Business Inventories m/m
•10:00am USD IBD/TIPP Economic Optimism

Summary
The USD continued in two-way consolidative trade today starting firmer in Asia but weakening a bit in New York trade this afternoon. After the London fix the Greenback came under selling pressure after the early strength seen this morning dried up as Crude Oil prices and weakness in Equities failed to inspire the USD bulls. Initially falling to lows at 1.9714 in late Europe Cable rallied to post highs on the day at 1.9965 before large offers were seen; the rate grinding higher on lighter volumes until stops were hit above the 1.9950 area. Cable found resistance at the 200 bar MA today suggesting that there is selling pressure by large players with bids on light drops. Forex traders were expecting the GBP to track EURO and once the semi-official names were on the bid in EURO the GBP rallied with it. EURO high prints at 1.5972 went unchallenged so far today but the rate is firm above the 1.5900 handle and traders are beginning to say that a test of the 1.60 handle looks almost certain after the lack of selling pressure seen recently. Traders also note that order boards are thin above the 1.5950 area with offers at the lifetime highs above the 1.6000 handle to 1.6020 area; above that the stops are thick suggesting the bias is for downside pressure as active players apparently are selling rallies while smaller or technical traders are buying dips. In my view, the upside is still limited and the potential for a large correction in EURO is still growing and a counter-trend move of significance may be brewing. USD/JPY continued to whipsaw covering a lot of the most recent ground again as technical support holds at the 106.00 area after a rally to the resistance area of 106.80 area attracted exporter selling by Japanese names. Traders note that the pair is range-trading within tighter and tighter ranges suggesting the rate is coiling for a strong breakout in one direction. Should that move be south there will be a large amount of stops layered under the 105.80 area in my view. I really think the pair is set to fall back and the move could be explosive. USD/CHF continues to chop away within established ranges; low prints at 1.0133 make for a test of the bottom of the recent trend; high prints overnight at 1.0253 were offered by large names in Asia traders say. The pair could be setting up for a broader pullback so any rally is a sell. For the most part, today’s USD trading has been about as expected with action confined to established two-way ranges. Look for tomorrow’s data to break the USD out of this area.


GBP/USD Daily

Resistance 3: 2.0000/10
Resistance 2: 1.9980
Resistance 1: 1.9960
Latest New York: 1.9931
Support 1: 1.9800/10
Support 2: 1.9750/60
Support 3: 1.9700/10

Comments
Rate rotates higher, clears close in stops from shorts. Follows EURO higher, but large stops above the market remain. Bids likely under the 1.9800 area to support near-term but sell signal is active; traders report a lot of stops building under the 1.9790 area. Traders expect GBP to track EURO through this week. Traders now expect a top to form as the rate had thinner volume on the rally last week into the reported option defense last week. Continue to expect a lot of cross-trading.

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

4:30am GBP CPI y/y
4:30am GBP Core CPI y/y
4:30am GBP RPI y/y


EUR/USD Daily

Resistance 3: ?
Resistance 2: 1.6000/10
Resistance 1: 1.5980
Latest New York: 1.5906
Support 1: 1.5820/30
Support 2: 1.5780
Support 3: 1.5750

Comments
Rate has a short-squeeze again as stops above the 1.5800 and 1.5880 area trigger; model accounts on the bid Friday traders say. Selling from solid sources capped rally Monday, possibly today as well. Technical trade and sympathy with Cable remains the main driver. 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 but those are now out of range. 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 volatility helping to whipsaw the rate.

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

5:00am EUR German ZEW Economic Sentiment
5:00am EUR ZEW Economic Sentiment


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 sharply lower
• EURO scores new highs and then reverses
• USD recovers some poise into the close

Overnight Preview
• Look for USD recovery, move lower overdone
• Book-squaring ahead of US data in the morning

Looking Ahead to Wednesday
All times EASTERN (-5 GMT)
• 8:30am USD CPI m/m
• 9:00am USD TIC Net Long-Term Transactions
• 9:15am USD Capacity Utilization Rate
• 9:15am USD Industrial Production m/m
• 10:00am USD Fed Chairman Bernanke Testifies
• 10:35am USD Crude Oil Inventories
• 1:00pm USD NAHB Housing Market Index
• 2:00pm USD FOMC Meeting Minutes

Summary
The USD is sharply lower against most pairs but off the early lows as the markets close after a wild ride all day. The Greenback was two-way all day but later in the day recovered some poise to end flat against EURO after falling to a lifetime low ahead of the New York open. The EURO actually reversed to make lows late in the session dropping through the 1.5890 area of reported stops to trade 1.5864 low print before the slide was stopped. Forex traders note there were large names on the offers but also on the bids but once the fix was done, volumes dried up for the most part. Flows remained orderly but thinner and some are suggesting that we are at key S/R; if that is the case then expect the USD to rotate higher the next 24-48 hours. Cable rallied right with EURO and scored a high print at 2.0158 before reversing as well; traders note that the housing market in the UK may have stimulated trader reaction today due to the size of recent data suggesting the BOE must remain cautious on moving rates. Combined with Bernanke’s testimony here suggesting the Fed will not tighten until needed convinced traders that the risk was for additional volatility and longs-liquidated. GBP fell to a New York low around the 2.0010 area and in fact is remaining there into the close. USD/JPY dropped to a low print at 104.14 before staging a rally and regained the 105.00 handle briefly. USD/CHF also suffered a bout of whipsaw and posted a low print at 1.0011 before staging a strong recovery into the 1.0130 area by the close. The USD certainly has some bounce coming against people who ran with early momentum; in my view the USD will likely add to these late gains and will put on some weight tomorrow and overnight. In my view today was a head-fake in the majors. The USD break was overdone. It is more likely that the EURO will sink farther tomorrow and to end the week as a lifetime high was not enough to attract additional buying and that pair actually reversed on the day. Cable will follow EURO and the USD likely to return to resistance in the other pairs. Look for book-squaring overnight tonight.


EUR/USD Daily

Resistance 3: 1.5980
Resistance 2: 1.5950
Resistance 1: 1.5920/30
Latest New York: 1.5889
Support 1: 1.5850/60
Support 2: 1.5820
Support 3: 1.5780

Comments
Rate blasts through offers into stops for a high print at 1.6033; a new lifetime high. Reverses after London fix and Bernanke testimony (hints at no rate hike). Large names on the offer reported into the highs, look for a top to form. Aggressive traders need to sell into the rally. Selling from solid sources capped rally Monday, possibly today as well. Technical trade and sympathy with Cable remains the main driver. Major support at the 1.5580 area and slightly below. Stops reported back under the 1.6000 area from late longs. 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; which is a long way away at this point. Exponential reversal still valid. Oil volatility helping to whipsaw the rate as are weak equities.

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

2:00am EUR German Final CPI m/m
2:45am EUR French CPI m/m
5:00am EUR CPI y/y
5:00am EUR Core CPI y/y


USD/CHF Daily

Resistance 3: 1.0180
Resistance 2: 1.0120/30
Resistance 1: 1.0080
Latest New York: 1.0113
Support 1: 1.0020
Support 2: 1.0000
Support 3: .9960/70

Comments
Rate follows Yen lower as expected, stops drive trade under the 1.0100 handle; “blue diamond” reversals on the Futures 60 minute chart. Trend line support broken and traders expect a test of parity soon. If short, look to ADD on a rally. If flat—be a buyer for the rally. Traders note support and trend line support failing completely and a rally will likely be sold. Stops said to be layered below the 1.0000 handle with tech support around .9950 area. Likely the rate will test under the 1.0100 area again for bids leaving a lot of potential two-way action. Buyers appear to be technical traders and expect some momentum accounts on the bid soon. The rate needs to be sold on any strength.

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

3:15am CHF Retail Sales 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.

Daily Forex Analysis

Today’s US Dollar Trading

• USD rallies
• US data benign
• Traders expect more upside but with two-way action

Overnight Preview

• Look for the USD to continue to range trade
• Majors to consolidate

Looking Ahead to Thursday
All times EASTERN (-5 GMT)
• 8:30am USD Building Permits
• 8:30am USD Housing Starts
• 8:30am USD Unemployment Claims
• 9:10am USD FOMC Member Kroszner Speaks
• 10:00am USD Philadelphia Fed Manufacturing Index
• 10:35am USD Natural Gas Storage

Summary

The USD is on the offensive today as lower crude oil prices and higher equities prices lift investor confidence. A slew of US data today was mostly benign but higher-than-expected US CPI data increased speculation that the US Fed will soon need to return to the tightening mode; additional comments from Chairman Ben Bernanke suggested that the Fed has not ruled out intervention on behalf of the USD. Although most forex traders consider the possibility of official intervention to support the USD as unlikely it was enough to drive the major pairs into the next layer of stops said to be resting under the initial lows seen overnight. Most pairs were on the lows for the day at the New York open but once the day got under way the USD began a steady climb with only minor corrections all day. GBP fell through support at the 2.0000 handle to uncover minor stops at the 1.9980 area for a low print at 1.9955; traders note that volumes were modest but that the GBP doesn’t “feel comfortable” above the 2.0000 Handle”. EURO also found stops but more of them as the rate fell through initial support at the 1.5900 area; stops under the 1.5880 area and more at 1.5860 area for a low print at 1.5799 before a minor bounce to the 1.5820 area was seen. Traders expect the rate to continue lower all week now that the 1.5800 handle was broken; even if only slightly. Volumes were good on the move. USD/JPY rallied to the 105.00 handle but was unable to trade above; preferring to trade firm into the 104.80/90 area all day. Support on dips was from semi-official names traders say but expect more two-way action as the rate is inside previous monthly ranges so far this week. USD/CHF is also on the offensive but unable to score the 1.0200 handle; high prints at 1.0190 left upside stops rumored to be 1.0200/10 area intact for now. With the move higher in equities and the strong sense of support seen today on the dip lower many traders are suggesting that the USD is about ready to rotate higher the next few days. Should that be the case, expect the recent S/R levels seen middle-to-late last week to hold on the upside. Two-way action with wider ranges appears to be the rule to end the week.

GBP/USD Daily

Resistance 3: 2.0250/60
Resistance 2: 2.0200/10
Resistance 1: 2.0150
Latest New York: 1.9985
Support 1: 1.9950/60
Support 2: 1.9920
Support 3: 1.9900

Comments

Rate can’t hold gains overnight, follows EURO lower after no buyers came out into the highs suggesting a top is forming. Hold shorts. Offers layered above the 2.0080 area absorb stops, follows EURO lower after in sympathy. Bids likely under the 1.9950 area to support near-term but offers are getting thick from large names traders say. Traders expect GBP to track EURO through this week. Traders expect a top to form as the rate had thinner volume on the rally last week into the reported option defense so far this week. Continue to expect a lot of cross-trading. Rate at technical resistance. Stops likely under the 1.9950 may overcome bids ahead.

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

USD/JPY Daily

Resistance 3: 106.00
Resistance 2: 105.80
Resistance 1: 105.40/50
Latest New York: 104.97
Support 1: 104.00/10
Support 2: 103.80
Support 3: 103.50

Comments

Rate drops on aggressive selling of EURO/JPY cross; model accounts on the offer traders say. Aggressive traders can cover shorts under the 104.00 handle to take gains. Look for a rally to sell into. Rate likely to have lots of selling interest on further strength to the 105.80 area; aggressive traders can re-set shorts on a bounce. Exponential reversal signal still valid, expect more two-way action. Stops are likely building under the 103.80 area but on first look this morning they were small. Rally will be a dead cat bounce I think.

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

7:50pm JPY Monetary Policy Meeting Minutes
11:30pm JPY BOJ Governor Shirakawa Speaks


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
• USD mixed
• Quiet Technical trade
• Traders note volumes light with no major news

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 10:00am USD Leading Index m/m
Almost no data anywhere so expect technical trade all day to start the week.

Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
• 8:10am USD Treasury Sec Paulson Speaks
• 8:30am USD FOMC Member Plosser Speaks
• 10:00am USD House Price Index m/m
• 10:00am USD Richmond Manufacturing Index

Summary
The USD is mixed to start New York after a generally quiet overnight start to the week. Holding inside existing ranges on thinner volumes, the Greenback continues to consolidate and test technical S/R as traders look for near-term potential at current levels. Earnings for many US companies will be released this week and some desks report bids/offers are resting for both sides in the event that momentum picks up due to the news due; other major economic reports aren’t due until later in the week and that may be keeping a lid on activity for now. A minor Japanese holiday started overnight and for the day the Asian markets were very slow but the USD started weaker on follow-through from Friday’s close. After a brief run to the low end of the range the USD began to recover and is now higher on the day against GBP, flat against EURO and down slightly against other pairs. Cable had a high print at 1.9989 unable to clear stops said to be in range above e the 2.0000 handle; low prints were 1.9905 unable to clear stops under the 1.9900 handle either. Forex traders say the rate is tracking EURO but not as firm as EURO has been in demand on the crosses putting some pressure on Cable. High prints for EURO at 1.5910 attracted some bids but offers capped from technical traders and the rate is near the overnight lows at 1.5850; actual low prints at 1.5827. Traders note some news suggesting that talks surrounding Iran’s nuclear program have stalled have added some upside to the EURO this morning but no one is expecting an easy road with that debate anyway and that may be supporting EURO as Mid-East accounts look to flight to quality buying in the rate. USD/JPY is higher and above the 200 bar MA this morning for a high print at 107.16 before some light pressure was seen. Traders note that if the rate can manage a close above the 200 bar MA today a strong technical buy signal might be on the table for the technical traders; a rush of bids could start the Asian session overnight if that is the case. In my view, the USD is simply consolidating and a lot more two-way trade can be expected the next 24 hours. There is almost no news at all from everybody this week so short-term traders may have a lot of opportunity as the Greenback is likely to cover a lot of the same ground twice. Look for the Majors to extend their ranges during the day today.


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
• USD starts firm in Asia, weakens into New York
• Light volumes give traders caution
• Sovereigns on the offer in GBP and EURO

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 8:10am USD Treasury Sec Paulson Speaks
• 8:30am USD FOMC Member Plosser Speaks
• 10:00am USD House Price Index m/m
• 10:00am USD Richmond Manufacturing Index

Almost no data anywhere so expect technical trade all day to start the week

Looking Ahead to Wednesday
All times EASTERN (-5 GMT)
• 10:35am USD Crude Oil Inventories
• 2:00pm USD Beige Book
Continuing the slow start for US data this week.

Summary
The USD opened Asia firmer overnight and saw the best levels of the day in early trade. Volumes were light and traders report the focus has been more on the state of the US financial system more than Oil or Equities. In early NY trade the USD came under additional selling pressure form a weak round in European dealings, Wachovia Bank earnings were below estimates putting a damper on enthusiasm for the USD. Forex traders note overnight Russian interest on the buy side of EURO while Asian sovereigns were on the offer. Traders also note that CTA-type accounts were on the bid for USD/JPY around the highs at 106.60 area overnight suggesting that the drop to support around the 106.00 area in USD/JPY may have been some close-in stops placed before the Wachovia news; the rally in EURO and GBP also encountered Asian selling into the highs. The USD is on the defensive this morning but the volumes have been extremely light so far with technical S/R holding. Traders note that volatility may have been exaggerated due to thinner conditions and the lack of “real” news; the focus on US financials will likely only be temporary and once “real” news is out later in the week the USD weakness may have been temporary also. Aggressive traders can ADD to open shorts in EURO and GBP this morning as well as BUY USD/JPY; monthly highs in EURO and GBP are holding and with this rally in EURO the non-USD crosses have failed to extend recent gains suggesting a round of book-squaring/profit-taking by the longs is due. In my view, the USD is set to strengthen into the end of the week as this sell-off has been on low volume and can’t really extend losses past technical support levels already seen as attracting bids. Look for the USD to rally later today and into mid-week ahead of US data due Thursday. Of special note is the USD/JPY holding the 50 bar MA on the break this morning; in the past 60 days the 50 bar has tracked 400 points higher while the other averages have remained flat-to-lower suggesting there is near-term strength in the USD.


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 Trading analysis

Today’s US Dollar Trading
• USD reverses higher after a lower open in New York
• Traders note stops and liquidation off the lows
• USD/JPY flirts with close above the 200 bar MA

Overnight Preview
• Look for the USD to consolidate
• Two-way action ahead of minor news tomorrow

Looking Ahead to Wednesday
All times EASTERN (-5 GMT)
• 10:35am USD Crude Oil Inventories
• 2:00pm USD Beige Book
Continuing the slow start for US data this week.

Summary
After a low-volume sell-off this morning to trade at the worst levels of the day the USD rallied back hard to run stops and squeeze shorts all day into the close. Traders note that volumes increased dramatically once the reversal began to gain momentum and across the board the USD rallied through resistance to close at some critical numbers for the USD bulls. Cable tracked EURO lower as expected but found large stops resting in the 1.9930/40 area and traded to a low print at 1.9894 briefly before holding above the 1.9900 handle but well below the trigger point for the stops. EURO had a similar day eventually finding stops under the previous week’s low at 1.5780 area for a low print at 1.5756 before bouncing; the rate unable to regain the 1.5800 handle into the close making for a potential reversal today. Traders note that with the increase in volume on the rally for the Greenback it is possible that the USD has put in the low for the week; the majors have all completed minor reversal patterns suggesting the same. Although there was a bit of profit taking by the longs this afternoon the USD/JPY held onto solid gains above the 107.00 handle and closes around the 200 bar MA; stops were elected above the 107.20 are and high prints at 107.45 before a drop in volume and a fall back to the 107.10/20 area. Traders note that the rate has closed at the 200 bar MA which has ignited volatility in recent trade and more upside is expected to be sold with some forex traders suggesting offers ready at the 107.80 area. Today’s rally and test of the 107.50 area suggests that the USD has more upside ahead before a fall back making the ranges the Greenback has a bit wider and subject to more whipsaw. In my view, the USD has shown enough strength to look for another add point on the current open trades. I think aggressive traders can look to sell the GBP and the EURO around the closing levels today and look to buy more USD/JPY tomorrow after the Asian session. If oil continues to weaken early in Asia I think the USD/JPY could advance into reported stops above the 107.80 area and possibly challenge the 108.00 handle for the day; an excellent short potential I think. For tonight I look for two-way consolidation with a better bias for the USD.


EUR/USD Daily

Resistance 3: 1.6000
Resistance 2: 1.5980
Resistance 1: 1.5950
Latest New York: 1.5769
Support 1: 1.5750
Support 2: 1.5700
Support 3: 1.5650

Comments
Rate still two-way and extends range to start today; stops above the 1.5900/10 area triggered this morning. Try for highs on very low volume. Aggressive traders can ADD on this rally as volumes are low and this might be a head-fake. Rate closing under the 1.5800 area is another ADD, hold shorts and let it work. Stops under the 1.5800 area likely in size; expect a sharp break and a close under the 1.5800 area. Large names on the offer reported into the highs, look for a top to form. Major support at the 1.5580 area and slightly below. 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; which is a long way away at this point. Exponential reversal still valid.

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

2:45am EUR French Consumer Spending m/m
4:00am EUR Italian Retail Sales m/m
5:00am EUR Industrial New Orders m/m


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

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.

Also Check the Forex brokers section.

Read the Daily Forex Trading Analysis

Today’s US Dollar Trading
• USD regains poise after early break
• Oil and equities help the upside
• Volumes moderate

Overnight Preview
• Expect two-way action
• USD to consolidate

Looking Ahead to Thursday
All times EASTERN (-5 GMT)
• 8:30am USD Unemployment Claims
• 10:00am USD Existing Home Sales
• 10:00am USD FOMC Member Geithner Speaks
• 10:35am USD Natural Gas Storage

Summary
After a slide overnight against GBP and EURO the USD rallied back in late US trade to regain some territory after oil continued to slide and equities put on some weight. The Greenback is at better levels against all the majors than the start of US trade and is poised to challenge stops above the market across the board. Today’s US data was benign and more important data is due for tomorrows release and some traders are looking for the USD to make additional highs for the week although today’s rally volumes were not impressive suggesting that the majors are consolidating recent losses before making a more pronounced move the next 24-48 hours. Cable rallied above the 2.0000 handle but as been the custom above the 200 bar MA does not “feel comfortable” holding gains; the GBP fell back to trade the mid-1.9900 area leaving a strong selling wick above the market. Highs at 2.0032 were on very light volumes and largely stop driven before dropping back to make US lows under the 1.9970 area. A close below the 1.9950 area again is needed to drive the longs to the sidelines and that may come on the Tokyo open in my view. EURO fell as oil slid off and making lows for the US session and the day as well; some stops cleared as the rate dipped under the 1.5680 area for a low print ahead of the close at 1.5669; volumes were modest most desks report. USD/JPY struggled with offers at the 108.00 area managing a high print at 107.98 but has not retreated more than a few pips suggesting that a try for stops above the 108.00 area may be on the hook for tonight’s action. Aggressive Forex traders can place a resting limit order to liquidate longs at 108.25 looking for a test of offers at the 108.40 area; if you are really aggressive you might try a close and reverse but with US housing data still to come there is potential for the rate to try for the high 108’s the next 24 hours. Minor whipsaw today paved the way for small accounts to get cleared as they have been on the wrong side of the stops near-term. In my view, look for the USD to consolidate with a bit more upside on the books overnight.


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

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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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Overnight Asia/Europe
• Japan CPI worse than expected
• UK GDP drops but GBP rallies in sympathy w/EURO
• Volumes lighter, SWF’s buy USD

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 8:30am USD Core Durable Goods Orders m/m
• 8:30am USD Durable Goods Orders m/m
• 9:55am USD Revised UoM Consumer Sentiment
• 9:55am USD Revised UoM Inflation Expectations
• 10:00am USD New Home Sales
New Home Sales likely to drive trade.

Looking Ahead to Monday
All times EASTERN (-5 GMT)
• 12:00pm USD FOMC Member Mishkin Speaks
Very light calendar for everyone on Monday

Summary
The Greenback is lower this morning after failing to hold gains earned in New York yesterday; Japan CPI came in much higher than expected and USD/JPY whipsawed in early dealings. Most of the overnight action was dominated by the Yen crosses as demand for Yen pairs rallied the Yen pushing most of the major pairs higher against the USD overnight. Shorts were squeezed as close-in stops were triggered lifting the majors to previous highs against the USD making the overnight session a loss to momentum traders on the sell-side of GBP and EURO. Cable rallied back to the 1.9900 handle and found stops over the 1.9920 area also for high prints in European trade at 1.9980; two-way trade may have been exacerbated by thin volumes but the GBP caught USD bulls wrong-footed unexpectedly. Lots of sell interest reported on the approach to the 1.9900 handle including SWF’s but the offers were not enough to cap the rally at technical resistance and the next level is again in play. Expect a retreat from the highs on US data as well as technical trade the next 24-48 hours. EURO rallied back to the 1.5750 area as stops were triggered over the 1.5700 area; Forex traders report SWF supply at the 1.5715 area but as in GBP offers were not enough to contain the rally. The toolbox is currently offering a cluster of BUY signals to end the week and EURO shorts need to exercise caution at the current levels. Although the bounce to end the week is not unexpected and the larger timeframes are likely shorting EURO, the potential for the rate to whipsaw remains high. US data this morning will provide another clue for near-term direction. Should US data be friendly to the USD today expect a drop in the majors and a late rally in USD. USD/CAD rallied to a high print at 1.0171 overnight and remains the firmest of all the pairs to finish the week; aggressive traders can look to short the rate on any additional strength into the 1.0180/1.0200 areas. In my view the Lonnie remaining firm while every other major pair has suffered two-way volatility this week suggests that the USD is not out of the game yet when it comes to underlying upside potential. The large interest in Yen crosses overnight will likely fade early next week and if US data can help the USD firm up a bit before the close today I would look for this weakness to be a head-fake on the day. Look for resistance to hold for the day.


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
• Volumes lighter and ranges tighter
• Russians buy EURO, Swiss buy & Sell
• Technical action dominates

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 12:00pm USD FOMC Member Mishkin Speaks
Very light calendar for everyone on Monday

Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
• 9:00am USD S&P/CS HPI Composite-20 y/y
• 10:00am USD Consumer Confidence Index

Summary
The USD is mixed to start the week in light trade; volumes have been thin and traders report a lot of technical trading. The Greenback managed to score a new one-month high against the Yen in Asian dealings aided by demand for non-USD Yen crosses; sterling-yen rallied and spillover strength was seen in other pairs. High prints in the USD/JPY at 108.08 failed to trigger large stops said to be resting above the 108.00/10 area mixed with hefty offers; traders note that option defense may be playing a role in aggressive selling above the 108.00 handle but also note solid exporter offers in size. A rally past the 108.20 area most likely will expose some degree of stops with the majority rumored to be resting in the 108.50 area and beyond; above the 2008 highs. Forex traders note that dips have shown buyers suggesting that the rate has good interest from both sides at current prices; a breakout to the upside could have a lot of momentum behind it. EURO saw an early dip reverse to make highs in European trade; Russian bids apparently the driver in Asia and early Europe. Swiss private bank bids as well as offers suggest that the EURO has short-term interest and is possibly going to range trade. Traders note that the offers were layered between 1.5720 and 1.5770 all the way through stops at 1.5750 in size; the rate has a high print in early New York at 1.5765 but volumes have been low. Cable is weaker driven by Yen crosses overnight; high prints at 1.9927 and low prints at 1.9838 leaving less than a 100 pip range so far. GBP is under pressure this morning but has an inside-range day to start suggesting price direction is inconclusive. In my view, a low-volume rally in GBP combined with sympathy buying from upward pressure in EURO will result in a retreat by Cable as the day wears on; technical buying/selling usually can’t break a rate out of established ranges but poor economic news can. Due in the UK tomorrow is news that most certainly will be Pound-Bearish. Aggressive traders can hold their GBP shorts through the mid-week area as downward pressure is still due in my view. Look for the USD to remain range-bound today and rotated higher after lows hold today, I don’t think there is enough interest in the downside to attract sellers in size without news due on Wednesday. Look for the USD to consolidate for the most part.


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.