Today’s US Dollar Trading
• USD rallies hard after US news
• Stops drive a lot of trade
• Volumes larger
Overnight Preview
• Order boards wiped clean so expect consolidation
• Whipsaw likely around US data in the morning
Looking Ahead to Wednesday
All times EASTERN (-5 GMT)
• 8:15am USD ADP Nonfarm Employment Change
• 10:35am USD Crude Oil Inventories
ADP likely to be the big news for the day.
Summary
After a quiet and slow start overnight the USD rallied hard after the release of better-than-expected Consumer Confidence data to post the best levels of the month against most pairs. Although not a closely watched indicator, today’s Consumer data was enough to rally US equities which started the general climb by the USD until stops above the market were elected in size as had been rumored. Perhaps making for a self-fulfilling prophecy, the majors fell back through waves of stops were hit as traders bailed on long positions once news lows for the week were traded. Across the board the USD rallied and held firm after the London fix and into the close with strong volumes available to mark the USD higher. GBP fell through the 1.9840/50 area early in the day and pressured offers resting around the 1.9800 area until the stops were triggered taking the rate to a low print at 1.9759 in the afternoon. Not able to recover as of this writing the rate remains near the lows at 1.9778 area. EURO fell in sympathy as well finding stops at 1.5700, 1.5660, and what appears to be long-liquidation stops at 1.5600 for a low print at key support at 1.5550 area; low print at 1.5552 before bouncing. Post liquidation rallies in all pairs were dismal and the USD appears to have potential to consolidate these gains overnight. USD/JPY rallied past the 108.00 handle for a high print at 108.31 before offers capped the move; traders say exporter offers and long-liquidation selling plus long-term players and semi-official selling made for a hard top; traders expect the USD/JPY to fall back despite the firmness seen elsewhere. Both Swissy and Loonie are topping as well I think and the next 24-48 hours of hard US data likely to increase volatility a bit. Look for the USD to consolidate these gains and perhaps have a bit of two-way trade or early profit taking but if US data is dollar-friendly then the USD may have another leg higher in store near-term. Aggressive traders need to be ready to sell into this rally as the move is at key resistance across the board. The next day or so we will have short trades.
EURO/USD Daily
Resistance 3: 1.5840/50
Resistance 2: 1.5800
Resistance 1: 1.5750/60
Latest New York: 1.5582
Support 1: 1.5550
Support 2: 1.5520/30/30
Support 3: 1.5500
Comments
Low prints at MAJOR support; hard and fast break likely to encourage a round of short covering. Look to re-short later—OK to stay flat a bit as we just took a huge win from the short side. Close back under the 1.5700 area pressures buying signals; not a lot of bids due soon. Rate continues to track Cable and vice-versa. Stops above the 1.5820 area likely back out of range for today after the drop this morning. Stops under the 1.5620/30 area were as expected; now that they are cleared a rotation higher is coming.
Data due Wednesday: All times EASTERN (-5 GMT)
5:00am EUR Consumer Confidence
USD/JPY Daily
Resistance 3: 109.00/10
Resistance 2: 108.80
Resistance 1: 108.40/50
Latest New York: 108.13
Support 1: 107.20/30
Support 2: 106.80
Support 3: 106.50
Comments
Rate finds stops to drive higher but offers are massive traders say. Out of longs with nice gain; ok to reverse and short the rate but I am inclined to wait a day or so. Volumes were higher and suggest a lot of bids trying to score higher action but offers contain them. Equities continue to drag on the pair but close above 108.00 likely to inspire more two-way action. 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.
Data due Wednesday: All times EASTERN (-5 GMT)
7:15pm JPY Manufacturing PMI
Analysis by: Forexpros.com written by Jason Alan Jankovsky
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