Forex Market Update: U.S. Dollar Correction Could Be Underway

After further losses for the dollar on Monday, the dollar consolidated in Asian trading, unable to extend recent losses. Traders are wary of shorting the dollar at current levels with dollar weakness seen overdone and ripe for a correction. Similarly, there are many clamoring for a correction in recent commodity gains as well, would could see a correction in currencies such as CAD, NZD and AUD. Trading was generally subdued through the session, with EUR/USD consolidating within a range of 1.4133-1.4183. Cable continued to find support above 1.6400, trading a range of 1.6410-1.6466, while USD/JPY traded 96.09-63. No reaction was seen to the comments from Treasury Secretary Geithner that he sees sufficient demand for U.S. treasuries. No currency reaction was noted to news N. Korea is preparing another missile launch. Asian stocks were mostly higher after the strong gains in the U.S. market on Monday. Ten-year treasury yields eased after reaching 8-month highs on Monday. Oil eased slightly, but remained above $68 with commodities still underpinned by signs of global economic recovery.