Daily Analysis Thread

[ForexPros]

Today’s US Dollar Trading

• US data positive but USD falls
• EURO rallies past resistance and is again “euphoric”
• Sentiment returning to the bearish side traders say

Overnight Preview
• Look for the USD is firm in Asia and then come under pressure in Europe
• Some book-squaring likely ahead of US data

Looking Ahead
• 7:30 AM CDT Thursday Q4 GDP forecast + 0.6%

Summary
Despite positive news from US data today the Greenback continued to remain on the defense all day building on European weakness from the start. Although the USD started in Asia on the firmer side the firm USD was short-lived as general bearish sentiment has returned to haunt the USD bulls. Trading softer all morning, traders expect the USD to continue on the defense through tomorrow’s GDP data. Today’s New Home Sales were better-than-expected and included a revision higher to last month’s numbers but the majors refused to trade lower and in fact continued to make highs all day into and after the London Fix. The one exception was USD/JPY which never revisited the morning lows but continued to build on the 99.00 handle. Low prints at 98.87 were never challenged and despite USD weakness elsewhere the rate was able to extend gains during the day for a New York high of 99.61 before settling back a bit. Obviously volatility was the rule today as the majors first rallied then fell then rallied again to end the day; most noticeable was Cable. First scoring highs overnight against the 2.0100 handle before dropping back to the 1.9900 handle then recovering to the middle 2.0000 handle to make a mess of balance sheets from both sides. No one had a winning day in Cable I am sure of it as the rate crossed a 200 plus point range three times. EURO continued to shrug off news and continued to march higher all day; highs late in New York at 1.5832 after grinding higher all day with no let-up. Traders say that the bearish USD sentiment has returned in force and the fact that the EURO has recovered so fast after the potential top was in only underscores that the rate will likely test the 1.6000 area near-term. A double-top or perhaps a new lifetime high will likely cause a lot of jawboning but Trichet’s comments today left no doubt in the minds of traders that the ECB will not lower rates anytime soon. In my view, you need to be ready for another round of USD weakness. The USD is set to challenge lows I think.

USD/JPY Daily

R3: 100.00/10
R2: 99.80
R1: 99.50/60
Current Price: 99.26
S1: 98.80
S2: 98.50
S3: 98.20
Rate continues to soften from highs the past 48 hours; traders note that stops under the market helped drive into the lows today but bids as expected at the 98.80 area. Upside is limited for now after the rate failed to build on the 101.00 trade earlier in the week. More likely the rate will consolidate with a lower bias near-term. Tomorrows’ GDP data likely factored-in to prices already so unless a surprise is in the works expect the rate to fall briefly on Wednesday.

EURO/USD Daily

R3: ?
R2: ?
R1: 1.5900/10
Current Price: 1.5830
S1: 1.5750/60
S2: 1.5700
S3: 1.5650/60
Rate powers higher with absolutely no offers in sight; traders expect the rate to test 1.6000 by the end of the week. In my view, the market has gone “euphoric” again and likely will ignore fundamentals as complete bullish fever takes over. Model and momentum accounts active on the bid all day traders say, look for continued volatility and a “but the dip” mentality. Aggressive traders can look for a failure at a new high on huge volume and turnover but 1.60 looks almost certain.

Analysis 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.

[ForexPros]

Overnight Asia/Europe

• USD two-way
• Opens New York better
• Year-end drives Tokyo trade

Today’s Economic Reports

• 8:45 AM CDT Chicago PMI forecast 46.7

Looking Ahead

• 9:00 AM CDT Tuesday ISM Index forecast 48.2
• 7:00 PM CDT Tuesday Japan Tankan report

Summary
The USD is firmer to start New York this morning after opening on the weak side in Asia. USD/JPY rallied briefly as year-end needs favored short-covering and book-squaring but once the year-end buying was over the Greenback feel back to unchanged; the other majors were firmer into the start of European trading. Traders report volumes were light but it was still enough to help the USD extend its range against GBP; Cable falling back to the 50 bar MA at 1.9812 low print on the back of disappointing UK data. Trader’s note that the Sterling crosses were under pressure overnight and that contributed to the weakness in GBP to start the week. Many traders also note that the sentiment is turning to “sell rallies” in Cable suggesting that the rate will suffer more losses ahead. EURO is two way inside established ranges with the “usual suspects” on the bid/offer. Traders note that hawkish rhetoric the past few days has emboldened the bulls even with the rate sitting within a short distance from all-time highs. Sellers were at the 1.5830 area again with a high print to start the week at 1.5836 coming after a cross-driven rally from the Asian lows at 1.5758; stops are likely building in the 1.5850 area and ahead of the previous lifetime high at 1.5880 area. Look for a massive rally to the 1.60 handle if stops above the 1.5920/30 area are triggered; in my view the rate is poised for 1.6100 on an extended technical play but that would be the place to short the rate. Aggressive traders can sell EURO on a rally into new highs. For the most part the USD is trading sideways with a slightly firmer tone to start Monday but I think that caution is advised on the long side. I don’t think the Greenback is recovering just yet; I think there is simply a lack of selling. Today’s Chicago PMI data will likely be USD negative and the USD could fall back from the firm open. This week’s data is also expected to be weak so I would be a cautious buyer of USD on the break into the recent lows if we get them. I think the USD is trying to bottom in here and that when it does it will make the turn. In the meantime, expect two-way action and stops on both sides to get triggered over the next 72 hours.

GBP/USD Daily

R3: 1.9980
R2: 1.9930/40
R1: 1.9880
Current Price: 1.9845
S1: 1.9810/20
S2: 1.9780
S3: 1.9750
Rate finds some support as expected at the 50 bar MA; look for a technical bounce the next 48 hours but as long as the highs remain under the 1.9950 area on a closing basis the shorts are gaining control. Strong sell signal on the daily will need a day or two to confirm so sells strength into the 1.9980 area in my view. Close under the 50 bar MA argues for further declines and large stops likely under the 1.9780 area; big money traders likely to work with “stop close only” orders under the 50 bar MA.

USD/JPY Daily

R3: 100.80
R2: 100.50
R1: 100.20/30
Current Price: 99.57
S1: 99.10/20
S2: 98.50/60
S3: 98.00
Rate continues to consolidate and range-trade within established S/R; rate could be coiling for a sharp move in either direction but the bias is downward in my view. Look for stops above the market to be thicker at 100.50 area and below the market at 98.50 area; I think the bears are willing to cut and run on any strength and the early bulls will bail on any weakness, both sides are nervous I think. Close over the 100.00 area argues for upside break; close under 99.10 for downside.

Analysis 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.

[vladv]

Thanks, this is a very professional analysis.

[ForexPros]

Today’s US Dollar Trading

• USD remains two-sided
• US data no factor
• EURO attempts new high

Overnight Preview

• Look for more consolidation
• USD likely to remain two-way near-term

Looking Ahead

• 7:00 PM CDT Monday Japan Tankan report
• 9:00 AM CDT Tuesday ISM Index forecast 48.2

Summary
The USD continued to range-trade today for the most part initially rising in Asia then falling into European trade. Briefly lower on the day the Greenback started New York close to Friday’s closing levels in technical two-way action until the release of Chicago PMI data. Although better-than-expected the report failed to lift the USD any higher than the overnight prints and in fact once the news was out of the way the USD began to falter into the London Fix. Falling hardest against the EURO the USD looked as if it might drop convincingly but bids under the market supported and the majors headed south for the most part leaving the USD trapped within existing ranges and out of the really big stops. Traders suggest that today’s action in EURO may be close to a topping signal as the market ran for new highs above the 1.5905 lifetime high but ran into offers to cap the rally at 1.5895 before falling a full handle as the day wore on. EURO actually closed negative on the day and traders argue that volatility and a lower close all point to a near-term top again. In my view the rate is indeed looking to top but there is most likely one more lifetime high in the works; the sellers today were covering longs I think. Short-term gains aside, longs are still lightening up on their positions leaving the early shorts chasing the drops. I think the close-in stops set today will fall soon as did stops at the 1.5860 and 1.5880 area did today. Early sellers are still at risk because the volumes have been light. Light volume sell-offs are not a good sign for a price decline in my view. I think aggressive traders will use the pullback to get long again as no real technical damage was done to the EURO. Cable tracked the EURO both higher and lower with lots of interest from cross-spreaders overnight. I think the GBP is set to remain whippy the next few sessions so be nimble if you are trading GBP. USD/JPY continues to hold under the big stops at 100.30/50 area and above the 98.50 area. Trapped in a range the rate is looking a lot like it did in February; look for traders to remain less-patient in that pair tomorrow. Tankan out tonight so expect some volatility.

GBP/USD Daily

R3: 1.9920
R2: 1.9880
R1: 1.9860
Current Price: 1.9828
S1: 1.9800/10
S2: 1.9780
S3: 1.9750
Rate holds below the 1.9950 area after rallying into that area today, look for the rate to bounce from the 50 bar MA again overnight with large stops likely out of reach at the 1.9780 area. Bids said to be at 1.9800/10 again with offers again on the approach to the 1.9880 area suggesting the rate will remain range-bound the next 24 hours. Aggressive traders can sell the next attempt at the 1.9880 to 1.9950 area for the next leg lower; I think the rate is due to follow-through sooner-or-later but is two-way now.

EURO/USD Daily

R3: 1.5890/1.5900
R2: 1.5860
R1: 1.5820/30
Current Price: 1.5786
S1: 1.5740/50
S2: 1.5700
S3: 1.5660
Rate tries for new lifetime high and is rejected on the first attempt; I think that is long-liquidation and early shorts capping the move but volumes were light. Stops above the 1.5900 area left untouched for now and stops above the 1.5950 area are said to be huge. Bids under the 1.5740 area layered with stops to the 1.5700 area traders say with more stops sub-1.5700. Rate looks ready to challenge for a new high the next 24-48 hours; aggressive traders can look to sell that high.

Analysis 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.

[ForexPros]

Today’s US Dollar Trading

• USD rallies hard on stops and new buying
• ISM data better than expected

Overnight Preview
• Follow-through likely but two-way action could result
• Big day for GBP Wednesday

Looking Ahead
• 7:15 AM CDT Wednesday ADP private payrolls forecast – 23K

Summary
The USD rallied hard today as traders covered shorts on stop-loss buying and fresh buying was seen during US trade. Initially overnight the USD was two-sided and steady as Japan Tankan report was released. Traders saw large names on the bid for USD/JPY as the report was considered bearish for Yen and the initial rally faltered into the start of European trade. Stops across the board were elected as the day wore on into the start of New York and the Greenback continued to climb as ISM index data showed a favorable move higher from expectations. Although not a positive report the news was enough for shorts to begin covering and the majors went one-way into and after the London Fix. USD/JPY climbed into waves of stops and fresh buying as technical levels fell for a high print into the end of the day at 102.17; right up against Fib defense for the recent decline. Expectations for a USD pullback before a drive higher were effectively tabled once the rate cleared the stops at the 101.00 handle earlier in the day. Cable fell into near-term support again after initially attracting bids at the triple-bottom monthly low at 1.9728 low prints. The rally was a full handle higher before cross spreaders began to liquidate the GBP side of their trades and the GBP could not hold above the 1.9970 area. Leading the two-way action lower was the EURO falling through stops at the 1.5660 area and eventually putting in a low print at technical support around the 1.5550/60 area; low prints at 1.5562. Traders say that the general tone of the action today was “surprise” that the Greenback was able to push so much higher. Traders note that spec accounts were buying USD today and judging from the sort of action they were seeing earlier last week they likely were covering shorts for a loss. In my view the USD was due for a rally but not before a correction lower. Due to the surprising nature of the move that no doubt cleared a lot of order books I would look for a lack of follow-through to inspire the shorts to re-enter their positions as the rally is still a bounce within a bear market. I think with the next few days of data expected to be USD-neutral to negative the prospects of aggressive buying I think are smaller. Aggressive traders can sell USD/JPY over the 102.00 area looking for a classic bull trap.

USD/JPY Daily
R3: 103.20
R2: 102.80
R1: 102.20
Current Price: 102.00
S1: 101.50
S2: 101.00
S3: 100.80
Rate has a two-Yen rally during New York trade as stops were cleared and aggressive model/momentum/spec accounts attempted to ride the rally. Fib defense at 102.20 area likely to hold for a modest pullback at least as this number was where sell stops were residing for early bottom pickers on the way down. In my view the rally was welcome but a bit overdone; look for a pullback to accelerate if US data the next two days is USD-negative. Stops from buyers likely in range. Expect volatility.

GBP/USD Daily
R3: 1.9920
R2: 1.9880
R1: 1.9850/60
Current Price: 1.9761
S1: 1.9720/30
S2: 1.9680
S3: 1.9660
Rate respects monthly low on two attempts today and three over the last month suggesting that there is good support at the 1.9720/30 area near-term. A rally back over the 50 bar MA would be a solid selling opportunity in my view as the 1.9900/50 area is becoming solid resistance. Stops likely building for a further move lower under the 1.9700 area with likely bids to support around there to 1.9680 area. Look for two-way action to remain through the overnight session ahead of ADP.

Analysis 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.

[ForexPros]

Today’s US Dollar Trading

• USD two-sided and volatile
• Ends New York mixed
• ADP data fails to inspire

Overnight Preview
• Look for more two-way action, traders expect stops to be tagged
• Technical trade likely as news will be thin

Looking Ahead
• Paulson in China—expect lots of hot air
• AM CDT Thursday ISM Services forecast 49.2

Summary
After a quiet start to the overnight session the USD continued a slow climb in European trade to trigger additional stops at or near technical resistance helping the USD to add a little follow-through strength from Tuesday; traders note after the release of ADP data THE Greenback began to soften and the majors ended firmer on the day. The action would be considered two-way and the USD covered a lot of the same ground twice giving day-traders a bit of solid potential. Traders note that stops across the board in both directions were triggered suggesting that the late longs were set overnight and this morning and couldn’t take the heat after the London Fix. GBP opened New York around the 1.9820 area and dropped into the 1.9700 handle after ADP; sitting firm on support the pair began to rally and by the end of US trade had scored several daily highs for a high print at 1.9901. Traders note that firmness was partly due to stops above the overnight high at 1.9850 area and spillover strength from EURO. EURO rallied after low prints in Europe held at 1.5533 for a high print at 1.5700 even; traders report that Middle-Eastern names and official buying was seen suggesting a run for new highs may be in the works. In my view, both EURO and GBP are set for a solid move but in opposite directions relative to the USD at this point. Further strength in the GBP is a selling opportunity and further weakness in EURO is a buying opportunity. I think the EURO/GBP cross will provide some volatility that will result in a USD rally against Cable. I think the potential for bearish developments in USD for the early part of Q2 will keep the upside firm in EURO. Between the two there will be some confusing counter-trend action so if unsure how to play the USD potential near-term it’s OK to focus on another pair for right now. USD/JPY rallied overnight and into today finding support at the 101.70/80 area and pushing through stops at the 102.50 area for a high print at 102.84 before giving a lot back to close in the 102.20 area; traders note that a lot of the action was driven by stops. Look for a fall back across the board as the USD can’t hold gains.

GBP/USD Daily

R3: 1.9980
R2: 1.9940/50
R1: 1.9900
Current Price: 1.9878
S1: 1.9840/50
S2: 1.9800
S3: 1.9720/30
Rate rallies on short-covering, stops and technical bounce but traders expect move to fail around current levels; 1.9950 area most likely strong overhead resistance at this point as that still represents the pivot area the past two months. Stops under the 50 bar MA likely to be growing and a close back under there likely to open the door for a test of the 1.9720/30 area again. Look for the rate to fail on residual strength overnight and return to the 1.9700 handle by end of week.

USD/JPY Daily

R3: 103.20
R2: 103.00
R1: 102.70/80
Current Price: 102.37
S1: 102.00
S2: 101.70/80
S3: 101.50
Rate fails to close above the 102.50 area of technical S/R suggesting that the rally higher was slippage; close back under the 102.00 handle tomorrow argues for a “head fake” rally as large stops are said to be resting at 101.50 area from late longs. Upside likely to meet selling pressure from Japanese exporters anywhere ahead of 103.00 handle some desks say. Rate is tracking stocks so a weak Nikkei tonight might pressure the rate. Look for weakness tomorrow ahead of NFP on Friday.

Analysis 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.

[ForexPros]

Overnight Asia/Europe

• USD higher overnight
• No real news driving trade
• Two-way action with stops helping to firm USD

Today’s Economic Reports
• None of note in the US

Looking Ahead
• 9:00 AM CDT Pending Home Sales forecast -0.5%
• 1:00 PM CDT FOMC minutes

Summary
The USD is a bit firmer to start New York this morning after making lows in Asia in quiet two-way trade. The Greenback was in no rush to get anywhere overnight as market-moving news was nowhere to be seen and traders focused on technical levels for the most part. Across the board the USD is high this morning with the main action coming in USD/JPY overnight. Traders note that large Japanese names were on the bid for the rate when early selling pushed the rate into a low print at 101.30; bids lifted the rate past the opening range and into stops at the 102.00 and 102.20/30 area for a high print at 102.64 before momentum faded. Additional buying helped extend the range to 102.86 in Europe where the rate rotated around the 102.50/60 area until the NY open. Currently the pair is holding under technical resistance at the 103.00 area with offers said to extend to 103.20 with stops beyond. The rate appears to be consolidating traders say and two-way action is expected to continue through tomorrow and the BOJ policy meeting starting tomorrow; no change in rates expected. Cable is softer after failing to attract bids above the 1.9950 area; high prints at 1.9956 are right in line with technical resistance and sellers were able to extend the rate into stops under the 1.9850/60 area; low prints at 1.9833 for now. Traders note that book-squaring ahead of the G7 meeting on Friday and projections for a 25 BP rate cut this week from the BOE are keeping pressure on GBP. Also of note the EURO-Sterling cross is firmer suggesting that the cross-rates may be driving some pressure on the rate also. EURO is down around the 1.5690 area after a firm close in New York last week drew sellers as the high prints at 1.5740 overnight are also technical resistance; traders note that the lows at 1.5626 drew bids from a private Swiss name. For the most part the EURO is range trading and consolidating but studies have the chart-readers looking for additional weakness. In my view, the USD is starting off firmer in two-way trade as short-time frame traders look to take advantage of potential short-covering and technical S/R areas. I don’t think the USD will hold gains easily as a lot of the fundamentals due this week are factored in.

GBP/USD Daily
R3: 2.0000
R2: 1.9980
R1: 1.9950/60
Current Price: 1.9875
S1: 1.9820/30
S2: 1.9750
S3: 1.9720/30
Rate has strong sell signal this morning after technical failure on the last rally leaves the rate vulnerable to a sell-off. Lows today supported by the 50 bar MA but stops now likely building in-range between the 1.9830/40 and 1.9780 area as short-term longs place orders. Big stops under the 1.9720/30 area still working and likely to be tested this week. BOE rate cut expectations are high and could get a “buy rumor/sell fact” rally; close today under the 100 bar MA a good sign for shorts.

USD/JPY Daily
R3: 103.20
R2: 103.00
R1: 102.80
Current Price: 102.67
S1: 102.20
S2: 102.00
S3: 101.50
Big stops rumored to be under the 101.50 area were a no-show overnight suggesting that the stops for size might be under the 101.00 area, large names on the bid traders say supported off the lows for a reversal into the highs. Offers said to be thick around the 103.00 area with stops higher suggesting the upside may be slow-going. A long selling wick is needed today and a close back under the 102.20 area better for the bears. Bulls need a break above 103.00 to keep momentum.

Analysis 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.

[ForexPros]

Today’s US Dollar Trading

• USD ends a bit firmer but volumes light
• Solid two-way action all day
• Traders note that market seems sidelined ahead of rate announcements

Overnight Preview

• Look for more two-way action, USD likely to stay in-range
• Look for S/R to keep rates range bound

Looking Ahead

• 9:00 AM CDT Pending Home Sales forecast -0.5%
• 1:00 PM CDT FOMC minutes

Summary
The USD ended very quiet today after downside follow-through was short and sweet during Asian trade; initial USD weakness was bought by technical and long-term accounts traders say. European trade saw the USD advance a bit but overnight ranges held through the entire New York session. Traders complained of thin conditions and lackluster, directionless trade. Major accounts were seen overnight but not so much during the day many desks reported and it was apparent that the Greenback had nowhere to go at all today and remained range bound inside recent highs/lows. One interesting note regarding stops; although all pairs saw stop-driven trade at the start of NY today it was the lack of stops at the 101.50 area in overnight USD/JPY that surprised many analysts. Looking for a huge move lower should the 101.50 area give way, USD/JPY saw only a modest 101.33 low print with an immediate bounce to make highs above the 102.50 area at 102.86; highs which held all day and were never challenged. USD/JPY settled into range-bound trade after the London Fix and eased lower at the close. Sterling was softer as well but holding current S/R both ways; high prints At 1.9956 were never challenged and the rate could not hold above the 1.9900 handle at all today. Lows at 1.9833 were never challenged also but the rate managed a weak close anyway at the 1.9850 area suggesting that the technical picture of consolidation with a lower bias remains. EURO also a bit softer but not as much as GBP; traders note that the rate saw sovereign and private bank interest on the dip into the low print at 1.5626 but no big action along with them so the rate held under Fridays’ highs for a high print today at 1.5740. EURO held firm most of the day but as in GBP and Yen; volumes were very light and thin. For the most part the USD consolidated slightly higher in thin volume; not a positive technical sign for the bulls but enough to take some money from the bears today. In my view, the USD is set to trade sideways through the overnight session and open mixed on Tuesday. Should be light ahead of US news.

GBP/USD Daily

R3: 1.9980/90
R2: 1.9950/60
R1: 1.9890/1.9900
Current Price: 1.9852
S1: 1.9920/30
S2: 1.9780
S3: 1.9720/30
Rate finds resistance over the 100 bar MA for the second time in two days suggesting the sellers are confident selling into rallies; close under the 50 bar MA would be preferable near-term as stops are likely building for the next leg lower inside the range from last week. Active selling needed to find stops I think; more under the 197.20/30 area for size desks say. Look for continued two-way action but strong-sell signal is valid for the next 72 hours. Aggressive traders can sell GBP over the 1.9900 area.

USD/JPY Daily

R3: 103.20
R2: 103.00
R1: 102.80
Current Price: 102.40
S1: 102.00
S2: 101.50/60
S3: 101.20/30
Rate under pressure from the highs all day in New York making lows for NY action late in the day and after the London fix suggesting that the sellers and buyers have exhausted themselves in only two trading zones; Lows in Asia followed by highs in Europe. Market goes two way into the end of the day suggesting that short-time frame traders likely controlling the market. BOJ meeting starts tonight and no rate change expected but look for rhetoric RE: who will be the new Governor.

Analysis 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.

[ForexPros]

Overnight Asia/Europe

• USD two-sided in range bound trade
• Overnight news thin but important
• BOJ holds rates steady as expected

Today’s Economic Reports

• None of note in the US

Looking Ahead

• 7:30 Am CDT Thursday Balance of Trade – 57.4B
• Friday Michigan Sentiment and G7

Summary
The USD is two-way to start New York after a relatively quiet overnight session that saw nothing unusual in the way of news. Starting a bit weaker in Asia the USD followed through briefly from US selling pressure but began to recover to press for highs during European trade. The BOJ held rates steady as expected which saw little initial reaction in the USD/JPY but within an hour or two the rate began to slide off as the Yen gained a bit on the news. No new Governor as of yet and that may be keeping the USD/JPY pair range-bound as the BOJ lacks direction and it is not known if a “hawk” or a “dove” will be appointed next. The Japanese economy is beginning to show signs of weakening and it is reasonable to expect that rates won’t change ahead of the end of the year. USD/JPY lows overnight at 102.16 with highs in Europe at 102.84 (again). Talk of option defense and official sales are limiting the upside this morning traders say. Cable remained inside established ranges for most of the overnight action but managed to probe for stops said to be resting in the 1.9650 area; low prints at 1.9649 but recovered after better-than-expected UK Industrial Production numbers came out. Highs in the rate at 1.9727 are right up against S/R and a failure here opens the door for the 2008 lows in my view. Aggressive traders can add to open shorts at the 1.9700 area if not already yesterday; look for the rate to close under the 1.9600 area on the week after US news tomorrow and Friday. Don’t forget the BOE meets tomorrow and a 25 BP rate cut is expected so some volatility around the news is likely. EURO continues to grind higher between the 1.5680 are and the 1.5750 area; low prints at 1.5682 and high prints at 1.5743 leaving stops on either side of consolidation untouched for now. Eurozone GDP released about as expected but showing a brief dip q/q while remaining at +2.2% overall; EURO had a muted positive response but unable to go anywhere at this point. US action today likely to keep the USD range bound one more day ahead of news due tomorrow; technical trade within expected ranges will likely make for a quiet day. Look for book-squaring at the London fix to provide some volatility.

GBP/USD Daily

R3: 1.5800/10
R2: 1.5780
R1: 1.5750
Current Price: 1.5723
S1: 1.5680
S2: 1.5650
S3: 1.5620
Rate continues to remain trapped in near-term pennant formation as the pair is coiling and likely to make a breakout within a few days. Traders note that stops are said to be in-range at 1.5750 and if triggered expect a sharp rise to the 1.5800 area where option defense and private name sales are likely. Stops under the 1.5650 area also in play but dips under the 1.5620 area likely to be bought traders say; potential to remain range-bound today is very high. Day traders may have some opportunity.

USD/JPY Daily

R3: 103.20
R2: 103.00
R1: 102.80
Current Price: 102.54
S1: 102.20
S2: 102.00
S3: 101.80
Rate remains range bound while bumping up against resistance for the fourth time in six days suggesting that the rate wants to try for stops above the 103.00 area but unable to vault offers ahead of 102.80; volumes are getting lighter and if the rate continues to coil in this area and fail there is a strong possibility for a free-fall several handle as disappointed longs bail; support at 100.00 area said to be strong. Resistance likely at the 50 bar MA should an upside break happen.

Analysis 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.

[ForexPros]

Today’s US Dollar Trading

• USD two-sided overnight
• Breaks lower during New York but still no new range
• Equities fall driving USD /JPY lower

Overnight Preview
• Look for follow-through selling of USD
• Book squaring ahead of US data in the morning

Looking Ahead
• 7:30 AM CDT Thursday Balance of Trade forecast -57.4B

Summary
The USD ends New York softer making fresh daily lows against most pairs after starting modestly firmer overnight. Initially firmer in Asia the Greenback remained two-sided for most of European trade and actually pressed for highs against some pairs in early New York today. Traders note that volumes were modest and flows were tight but once trade was in full swing the USD came under some light pressure. Close-in stops were seen in several pairs and once the EURO/GBP cross hit stops taking the rate into highs the USD really started to correct. Although holding previous S/R from last week and only modestly lower on the day from yesterday’s lows, traders note that the USD is more psychologically weaker due to the potential for G7 rhetoric to hurt the prospects for a recovery. Also weighing on USD today is the BOW and ECB rate announcements due out overnight. Traders are looking for no rate cut from the ECB and a modest 25 BP rate cut from the BOE. In either case, the move appears “baked in the cake” and traders expect that the USD strength leading into this week may have run its course. On the day, Cable dropped to a low print at 1.9649 overnight before bouncing higher on better UK data early this morning. High prints came after the London fix as EURO/GBP rallied to new lifetime highs and GBP was hit by stops on the way higher; high prints at 1.9798 were capped by long-liquidation traders say. EURO rallied also into highs at 1.5865 before encountering selling pressure to back off the highs; overnight lows at 1.5682 now seem a long ways away for the bears. Traders look for the rate to hold firm and attempt one more try at fresh highs; offers usually resting ahead of the 1.5880 area appear to be absent on the first round today. Stops noted above the 1.5780 and 1.5800 areas. USD/JPY rallied on BOJ rate news and potential for a new BOJ governor but high prints at 102.84 overnight were never challenged in NY trade; falling back to find stops under the 102.10 area and more at 101.80 area the rate had a low print at 101.49 before bids helped support. Across the board the majors did not reach any fresh ground so be prepared for a rotation the other way as the consolidation continues.

EURO/USD Daily
R3: ?
R2: 1.5900/10
R1: 1.5880
Current Price: 1.5825
S1: 1.5770/80
S2: 1.5720/30
S3: 1.5680
Rate powers higher on no news and short covering traders say, look for a brief try for highs and then a correction lower. Stops above the 1.5910 area said to be thicker now than last time the rate was here suggesting that the bears are more committed. Pair is in the sell zone of resistance so be ready for a pullback if no buyers show up overnight. Stops under the market likely back at the 1.5650 area which may be out of range today. Look for a quiet overnight session with follow- through to the upside early likely.

USD/JPY Daily
R3: 102.80
R2: 102.50/60
R1: 101.90/102.00
Current Price: 101.71
S1: 101.20/30
S2: 101.00
S3: 100.80

Rate holds at resistance again drawing sellers into the mix but total range still inside previous action so no real progress made by the bears or the bulls. Traders note that volumes were modest and tracking developments in other markets left the rate vulnerable to drifting. Stops likely under the 101.20/30 area in size, another stab for those orders likely overnight as equities disappoint Asian traders. Look for the rate to continue lower by the end of the week.

Analysis 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.