Overnight Asia/Europe

• USD opens Asia better but fails to hold gains

• UK Blanchflower comments ignored

• Potential short-squeeze in some pairs underway

Today’s Economic Reports

All times EASTERN (-5 GMT)

• 10:00am USD Existing Home Sales

• 10:00am USD CB Leading Index m/m

Looking Ahead to Tuesday

All times EASTERN (-5 GMT)

• 9:00am USD S&P/CS Composite-20 HPI y/y

• 10:00am USD CB Consumer Confidence

• 10:00am USD Richmond Manufacturing Index


The USD is mixed this morning after starting better in Asia; the Greenback is giving back gains across the board and opens new York better against CHF and JPY—lower against CAD and about flat against GBP and EURO. Overnight comments by BOE MPC member Blanchflower were seen as GBP-negative as he remarked obviously rates are heading towards zero and unemployment would rise; GBP low prints in Asia at 1.3547 were inside Fridays’ range and the rate is recovering to make highs in early New York at 1.3878 topping Friday’s highs. Traders note that shorts were caught wrong-footed after the news and covered as the rate inched up over the 1.3700 handle; a potential short-squeeze is in the works and more large stops are reported resting near the 1.3900 area and above. Cross-spreaders for Yen and EURO are also getting pinched a bit suggesting the rate is bid across all pairs making for a well-coordinated buying effort. EURO is slightly lower but on the rise no doubt being pressured by Cable; low prints at 1.2860 were again at technical support around the 1.2850 area with highs at 1.2988 so far. Traders note stops are likely on a break of the 1.3030 area which has acted as resistance the past few sessions. In my view the EURO is set to advance this week as most of the interest rate picture is factored in and economic news from the US this week is expected to be USD-bearish for the most part. Should GBP advance and hold over near-term resistance it likely will take EURO with it. USD/CHF high prints were also inside range at 1.1647 but the rate is holding under the 1.1580 area in early New York suggesting that resistance over the 1.1580 area is solid near-term. Low prints at 1.1533 were supported but the last few days of closes have been around the 1.1520 area so a test for lows today would be crucial I think to a potential top forming in the 1.1580/1.1650 area. USD/CAD is lower and dropping to new lows under Friday’s close, low prints at 1.2174 are under the 50 day MA and under near-term fib support suggesting the rate will decline for the week; high prints in early Asia at 1.2391 were on low volume traders say also lending support to a down move coming. USD/JPY is higher overnight as support at the 88.50 area continued to hold; low prints at 88.25 were quickly bought in Asia as follow-on selling from Friday’s weak close failed to find additional sellers. High prints in late European trade at 89.49 leaving a fairly tight range but showing signs of a potential short-squeeze to end the month. In my view, last week was the important week for the USD as continued signs of topping against most pairs suggest the USD will end the month net higher but well off the lows. A lower close this week for the USD will signal a lower Feb as well I think. Look for the USD to remain under pressure through mid-week data.

Forex Analysis written by Jason Alan Jankovsky, featured by forexpros.com