Today’s US Dollar Trading
• USD ends mixed-to-weaker
• Official names selling rallies
• Majors ready to rally

Overnight Preview
• Look for more consolidation with a lower boas

Looking Ahead to Wednesday
All times EASTERN (-5 GMT)
• 8:30am USD Core Retail Sales m/m
• 8:30am USD Retail Sales m/m
• 8:30am USD Import Price Index m/m
• 10:00am USD Business Inventories m/m
• 10:35am USD Crude Oil Inventories

Summary
The USD ends today mixed after running stops in both directions today; whippy conditions and thinner volumes helped the Greenback to see some volatility today. Initially better on the day and into European closes the USD reversed today against Yen and EURO but held firm against GBP and Swissy. Although the sentiment is for further USD gains most traders are reporting the recent rally may have run its course for now and with more potentially negative USD news due the next few days some traders are seeing profit taking on the sell side today. Rumors of Russian bids and Swiss bids in EURO helped to underpin that rate with the pair making highs in early New York after the release of better Balance of trade data today. Rallying to a high print at 1.4966 the rate was able to hold gains through the day despite some selling pressure spillover from GBP. Cable was unable to hold gains at all today slipping to the 1.8980 area into the close after holding above the 1.9000 handle most of the day; traders note cross-spreading was likely contributing to the weakness in GBP. USD/JPY finally saw the offers take control of the market as stops were triggered under the 109.50 area for low prints late in the day at 109.28; earlier rallies above the 110.00 handle were turned back after several attempts to make highs and now the rate appears to have topped. USD/CHF is in a similar situation but has managed to hold a bit firmer but still off the highs at 1.0928; looks like a close at 1.0860 area is in the works. On the day the USD is looking weaker and I expect a bit more downside with volatility to result; there are a lot of people with the “buy the dip” mentality waiting for a technical pullback; in my view the USD is setting up for sharply lower prices near term.

GBP/USD Weekly
Resistance 3:  1.9220
Resistance 2:  1.9180
Resistance 1:  1.9150
Latest New York: 1.8966
Support 1:  1.8960
Support 2:  1.8920
Support 3:  1.8900

Comments
Rate falls back in sympathy with EURO; makes lows late in the day while other pairs hold firm suggesting cross-spreading and whipsaw. Rate is under pressure from stops under 1.9000 initially despite higher CPI. Volumes lighter into the lows. Technical buying seen from some desks, buying seen from semi-official names last week and likely more this week. Rate has likely flushed out every long now and shorts will likely take gains soon leaving the rate vulnerable to a sharp rally. Possible buying from semi-official names so watch the news. Offers above the market mixed with stops from late shorts so be ready for whipsaw the next few days. Traders expect GBP to track EURO through this week. Continue to expect a lot of cross-trading.  
Data due Wednesday: All times EASTERN (-5 GMT)
4:30am GBP Claimant Count Change
4:30am GBP Average Earnings Index y/y
4:30am GBP Unemployment Rate
5:30am GBP BOE Inflation Report

EURO/USD Weekly
Resistance 3:  1.5000/10
Resistance 2:  1.4980
Resistance 1:  1.4930
Latest New York:  1.4922
Support 1:  1.4800/10
Support 2:  1.4760
Support 3:  1.4720/30

Comments
Net higher day argues for possible short-squeeze. Rate making lows in early trade but then bounces hard, technical selling evident from model accounts traders say suggesting that the rate has finally bottomed. Gap lower has been filled making for a technical buy signal from the lows. Market is heavily short now so expect a rally. Larger names buying traders say. Likely the rate has flushed all longs. Macro accounts seen selling on the break Friday. Aggressive traders can buy this dip for a return to resistance although we were stopped out of first attempt at a long. Rate continues to track Cable and vice-versa. Now that stops are cleared a rotation higher is coming. US data this week likely to be unfriendly so be ready for whipsaw.
 
Data due Wednesday: All times EASTERN (-5 GMT)

5:00am EUR Industrial Production m/m

Analysis by: Forexpros.com written by Jason Alan Jankovsky

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