Daily Analysis

Today’s US Dollar Trading
•    Two-way action due to equities
•    Traders note USD feels neutral
•    EURO makes lows late

Overnight Preview

•    Look for more USD upside to start overnight
•    Two-way action likely to continue into US tomorrow

Looking Ahead to Wednesday

All times EASTERN (-5 GMT)
•    8:30am USD Building Permits
•    8:30am USD Core CPI m/m
8:30am USD CPI m/m
•    8:30am USD Housing Starts
•    9:00am USD FOMC Member Kohn Speaks
•    10:35am USD Crude Oil Inventories
•    2:00pm USD FOMC Meeting Minutes


The USD continued in solid two-way trade today after earlier gains gave way to losses mid-day and then reversed yet again to finish better on the day against most pairs. Traders blame volatility in equities today for the whipsaw across the board as Wall Street was unable to hold gains into the end of the day. GBP rallied overnight into high prints at 1.5094 but those highs remained unchallenged in New York trade as sellers offered the rate lower more than a full handle to finish at the 1.4920 area; traders note pressure from EURO losses late in the day suggesting that the near-term lows still are under threat for additional attempts for new 2008 lows. EURO tracked equities for most of the day rallying to new US highs mid-day at 1.2701 before reversing to make new lows on the day at 1.2566 making for a slight reversal on the charts; traders in both pairs note that the same buyers seen the past few sessions were back on the dips but unable to hold gains suggests that stops will build overnight under current lows. USD/JPY had high prints on equities strength at 97.42 before reversing with stocks for a test of the lows at 96.01 but unable to trigger stops said to be resting in that area; the rate holding at 96.50 into the end of day. USD/CHF rallied in thin volume to find stops above the 1.2024 area for a new two-year high at 1.2049 and ends firm above the 1.2000 area at 1.2030; traders note that technical buying appears to be holding the rate firm as reversal signals evaporate in late trade. Weaker commodities pricing also cited for the better USD although usually that would be bearish in the rate making for difficult trade. Today’s US data was considered neutral for the Greenback and traders note that despite the volatility and two-way action today the USD feels neutral on the day suggesting that more two-way action is likely overnight. In my view, despite the late rally in the USD , the recent ranges are holding with the exception of Swissy suggesting that the majors will continue to sketch out wide trading ranges as we head into the end of the week and possibly the month. With a short week next week for the US Thanksgiving holiday expect book-squaring and liquidation of positions as traders finish the last full week of the month by Friday. Overnight the Yen crosses likely will remain in focus as lower equities have prompted Yen selling so expect more losses for the majors as they rotate back to the lows ahead of US trade.  


Resistance 3:  1.5200/10
Resistance 2:  1.5150
Resistance 1:  1.5080
Latest New York: 1.4926
Support 1:  1.4650
Support 2:  1.4580
Support 3:  1.4480/1/4500


Overhead resistance around 1.5100 holds on first try today, tracking EURO and equities for the most part. Traders note stops above the 1.5100 handle likely building near-term. Resistance is expected to hold rate for a pullback and aggressive traders can buy that dip if it comes. Cross spreaders continue to hold interest near-term; profit-taking likely to result in a squeeze on the further strength. Thin conditions continue to exacerbate moves. Some stops noted on the break back over the 1.4850, 1.5000, and 1.5050 areas yesterday; the rate continues two-way on the move. Technical trade overnight as traders decide near-term action with little to go on but the charts.  BOE rate cut next month increasingly likely but that is likely completely factored in at this point. Traders note liquidity is only moderate and still on the lower side. Aggressive traders can look to buy the next dip.  
Data due Wednesday: All times EASTERN (-5 GMT)
4:30am GBP MPC Meeting Minutes
6:00am GBP CBI Industrial Order Expectations
1:40pm GBP MPC Member Gieve Speaks

Resistance 3:  1.2850
Resistance 2:  1.2800
Resistance 1:  1.2750
Latest New York:  1.2621
Support 1:  1.2520/1.2500
Support 2:  1.2450/60
Support 3:  1.2400


Rate reverses after highs at 1.2700 area attract profit-taking by the longs and selling by the shorts; rate dips to lows into the 1.2500 handle and a drop to support likely overnight. Two-way action still suggesting a point on indecision; traders note stops building above the market around the 1.2750 area or so suggesting short-term traders active. New weekly low rejected fairly hard suggesting a re-test is a solid buy if not already long on the dip. Traders report some semi-official interest the past 48 hours. Resistance is still formidable but large names on the dips traders say. On a rally, traders note large stops at the 1.2950 area with more over 1.3000 but offers likely to cap. Support also from cross-spreaders as they unwind Yen. Official interest noted traders say. Rate is an absolute screaming buy in my view—I can’t see further weakness being ignored by the buyers. Traders note the rate is finding profit-taking bids on dips so far despite the uncertainty in the market.  
Data due Wednesday: All times EASTERN (-5 GMT)

Analysis by: – Written by Jason Alan Jankovsky

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