Overnight Asia/Europe
• USD two-sided
• Volumes light
• Most of Asia closed, Europe closed for Easter Break
Today’s Economic Reports
• 9:00 AM CDT Existing Home Sales forecast 4.86M
• 9:00 AM CDT Consumer Confidence forecast 75.0
Looking Ahead
• Durable goods on Wednesday
• Educational Broadcast on Wednesday
Summary
The USD resumed trading after the three-day Easter holiday on the offense in a very light session overnight; most of Asia was closed and Europeans are on their Easter break. Most large banks had light staff on the desks and the Greenback is trading mostly in a technical consolidation traders say. News overnight was sparse with today’s US data likely to cause little price action most agree. Overnight ranges were mostly within existing ranges from last week and the tone of the majors appears to remain more consolidative and possibly defensive. The USD was two-sided overnight as light volumes kept everybody on the sidelines most desks were reporting. GBP had a narrow 94 pip range and opens New York near the highs; high prints at 1.9851 and lows at 1.9757. Although the GBP continues to trade with a weak tone the 50 bar MA is offering some support while the 21 day MA is offering resistance suggesting that the rate is trapped in a consolidation sideways. In my view, any rally is a sell and aggressive traders can add to open shorts on a pop above the 1.9900 handle. EURO is two-way also with a more reasonable range of 117 pips but is unable to find buyers in size despite the rally into the 1.5450 area; high prints at 1.5457. Lows in the rate were at 1.4340 and traders report light stops on the break into new lows below last week’s lows but fib defense at 1.5330/40 area appears to be offering a bit of support near-term. Traders note that volumes in the EURO are very light as Europeans take a break also. In my view, the EURO has put in a top for an expected correction and I would look to sell strength into the 1.5550 area; anything over the 1.5480 area is a solid sell I think. Overnight USD/JPY regained the 100.00 handle again looking like a more aggressive rally could result. Lows at 99.38 followed by highs at 100.17 making for a tight range but that is due to thin conditions no doubt. Lack of news from Asia likely to keep the USD two-way but news from the US may help the rate into stops likely to be around the 100.50 area or slightly higher. For the day; look for the USD to continue sideways.
EURO/USD Daily
R3: 1.5500
R2: 1.5480
R1: 1.5450/60
Current Price: 1.5434
S1: 1.5400
S2: 1.5380
S3: 1.5330/40
Rate finds some support at 38.2% fib defense but light volumes and thin conditions may exaggerate the bounce; so far holding a “doji” pattern after attempt to rally failed early. Likely that stops are now rolled up under the 1.5330 area for a weekly low; should the low be broken a deeper correction to the 1.5280 area likely. I think the rate continues to soften as the worst in the USD is over for now and look for the 1.5000 handle to fail as the correction deepens in the next few weeks.
USD/JPY Daily
R3: 100.80
R2: 100.50
R1: 100.10/20
Current Price: 99.75
S1: 99.20/30
S2: 99.00
S3: 98.80
Rate continues to build on early bid interest on the potential rejection of the exhaustion break. Exponential reversal still valid and building credibility for a sustained rally to the 105.50 area of the 50 bar MA; look for stops to be massive layered in the 101.50/60 area through the 102.20 area; that was where the panic selling started from. Sellers likely to get scarce as the rising wedge pattern gains security. In my view, the rate is set to rally and dips are a great buy.