Today’s US Dollar Trading
• Unusually quiet, little volume
• Ranges hold for the most part
• No real push either way with any conviction
Overnight Preview
• Look for more quiet action
• Two-way and technical action to continue
Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
• 9:00am USD S&P/CS HPI Composite-20 y/y
• 10:00am USD Consumer Confidence Index
Summary
Despite a mixed opening and solid two-way trade, none of the majors were able to extend gains against the USD today in super-light trading. Cable scored a modest new high from overnight action, as did Yen, but all the major pairs continue inside previous support or resistance with modest interest on both sides remaining after the first day of trading for the week. GBP held gains made in New York reversing off the lows seen in late Europe but still not attracting large size. Most of the action was considered drifting trade with little impetus behind it suggesting the GBP was drifting higher from lack of selling rather than outright buying. Trader’s note that “absolutely nothing” was going on after the London fix. EURO remained stuck inside a very tight 30 point range after the fix which saw some EURO selling but not enough to break the rate back convincingly under the 1.5700 handle. Traders complained of very light volume again as was the case in all the pairs. USD/JPY fell to a new daily low at the 107.33 figure but saw some solid bids emerge to lift the rate off the lows; high prints overnight at a new monthly high of 108.08 remained unchallenged in NY trade and traders expect another test to draw out the offers again tonight. For the most part the USD was the victim/beneficiary of non-USD cross spreading which again saw demand for Yen at the highs. Exporters on the offer will likely be seen tonight. About the only USD pair with any upside follow-through from last week today was USD/CAD. Traders note that high prints at 1.0247 included light stops and possible official buying suggesting the rate will try for the 1.0250/80 area before reversing. In my view, the Loonie is at the top of the range and a drop is coming so aggressive traders can sell USD/CAD anytime over the 1.0250 area near-term. I’ll make it an official set-up in the next 24 hours but I like the sell side over the 1.0250 area. In my view, the USD has had a dismal day of non-event trading. Today’s highs/lows cannot be relied on to offer significant data for the coming few days as the volume were so low and the interest non-existent. Traders appear to be waiting for more news later in the week. Expect a quiet overnight session also.
EURO/USD Daily
Resistance 3: 1.5840/50
Resistance 2: 1.5800
Resistance 1: 1.5750/60
Latest New York: 1.5749
Support 1: 1.5670/80
Support 2: 1.5620/30
Support 3: 1.5580 (MAJOR SUPP)
Comments
Early break bought back but whipsaw is on no volume and rate is stuck. Some semi-official selling possible. Stops and short-squeeze by Russian buying this morning; resistance at 1.5750 area holding. SWF’s were selling EURO on the rally last week; need to see them back this week. Close back under the 1.5700 area needed to pressure buying signals or at least postpone them a few days. Lots of two-way action under the 1.5700 handle. Rate continues to track Cable and vice-versa. Stops above the 1.5820 area possibly in range today; stops under the 1.5620/30 area likely in size and enough to test 1.5580 major support. Hold shorts and let it work. Large names on the offer reported into the highs, look for a top to form. Major support at the 1.5580 area and slightly below. The 50 bar MA likely to offer support should the rate fall back but still looking for a test under the 1.5600 area soon.
Data due Tuesday: All times EASTERN (-5 GMT)
All Day EUR German Prelim CPI m/m
USD/JPY Daily
Resistance 3: 108.80
Resistance 2: 108.40/50
Resistance 1: 108.00/10
Latest New York: 107.48
Support 1: 107.20/30
Support 2: 106.80
Support 3: 106.50
Comments
Early dip bought back, rate holds ranges despite an early attempt through the 108.00/10 resistance area. Volumes not that high suggesting more two-way action and bids will support. Rate grinding into offers and a rally may come overnight Monday. Equities continue to drag on the pair but support appears sold on the dip to 106.50 area. Rate is ready to test the size of offers at the 108.00 area and beyond in my view. More stops beyond above 108.50 in large size traders say. Rate likely to attempt more gains if oil drops and equities rally. Exponential reversal signal still valid, expect more two-way action and a test of the highs. Look to cover longs on a rally over the 108.25 area.
Data due Tuesday: All times EASTERN (-5 GMT)
7:50pm JPY Prelim Industrial Production m/m
Analysis by: Forexpros.com – written by Jason Alan Jankovsky
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