Today€™s US Dollar Trading

€¢ USD lower in Asia, firms into New York and holds

€¢ New highs in CAD but USD ends mixed

€¢ Traders note solid bids in some pairs on the dip

Overnight Preview

€¢ Look for more two-way technical action

€¢ USD is due for a correction

Looking Ahead to Tuesday

All times Eastern (-4 GMT)

€¢ 7:30am USD Fed Chairman Bernanke Speaks

€¢ 9:00am USD IBD/TIPP Economic Optimism

€¢ 9:00am USD Wholesale Inventories m/m


The USD is holding gains into the end of New York trading today after solid two-way action overnight put the Greenback on the offensive into this morning. Rising to new weekly highs against GBP and yearly highs against CAD; other major pairs remain range-bound and inside-range. Traders note that cross-spreaders for GBP pairs kept Sterling on the defense all day putting in a low print at 1.3741 before stabilizing back on the 1.3800 handle for most of the day. Investor confidence remains weak to start the week as equities remained under pressure and traders note some flight to quality buying of USD was seen but remind that the Greenback is over-bought in the near-term. With high bullish consensus among traders it is hard to see the USD continuing to climb without some sort of a correction and traders note that in most pairs a €œbuy the dip€ mentality is in play. EURO tracked GBP lower for low prints at 1.2555 before rallying back to the 1.2660 area and edges lower to the 1.2620/30 area into the end of day; overnight high prints at 1.2728 remained unchallenged in New York. USD/CHF failed again at the 1.1680 area; high print at 1.1683 before retreating under the 1.1600 handle but lows at 1.1533 remain unchallenged on the day making the USD/CHF lower and inside range on the day near the end of day. Traders continue to remain fearful of possible intervention by the SNB but most traders see that as remote. USD/CAD was the big winner on the day rallying through stops over the 1.3000 area for a high print of 1.3066 before backing off a full handle later in the day; the rate is attracting a sizable amount of flight-to-quality buyers but traders remind that the multi-year highs are going to be a tempting area for sellers and how the rate performs to end the week may set the stage for a near-term top. Canadian payrolls due Friday may provide some ending fireworks to the week and if the rate can€™t close above the 1.3000 handle the next day or two a long-liquidation break may be brewing. USD/JPY followed USD strength elsewhere and rose to a high print in New York at 99.20 before dropping back to the 98.70 area; traders note a lot of exporter selling was absorbed above the 98.50 area and many are looking for a test of the weekly highs around the 99.60 area. Above there are likely stops but the big number will be the 200 day MA around the 100.00 area. In my view, the Greenback is continuing to show signs of a top in my view; overwhelming bullish sentiment but a failure to make highs across the board make for a suspect rally today. Look for more two-ay technical action overnight as the calendar remains thin for news. Aggressive traders can look to the sell side of USD the next 24 hours or so.

Forex Analysis written by Jason Alan Jankovsky, featured by