Daily Analysis

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

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.


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.


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.

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