Today€™s US Dollar Trading

€¢ USD whipsaws in two-way action, ends flat

€¢ Yen above the 98.00 handle in light trade

€¢ Stops in range drive action both ways

Overnight Preview

€¢ Look for the USD to continue consolidating

€¢ Majors setting up for a rally in my view

Looking Ahead to Wednesday

All times Eastern (-5 GMT)

€¢ 7:30am USD Challenger Job Cuts y/y

€¢ 8:15am USD ADP Non-Farm Employment Change

€¢ 10:00am USD ISM Non-Manufacturing PMI

€¢ 10:00am USD Treasury Sec Geithner Speaks

€¢ 10:30am USD Crude Oil Inventories

€¢ 12:00pm USD FOMC Member Lockhart Speaks

€¢ 2:00pm USD Beige Book


The USD is ending today flat to weaker after whipsawing traders all day in both directions; speculation regarding US stimulus actions and upcoming fundamentals is providing both sides with fuel for their argument. After starting weaker in Asia the USD rallied into New York action today extending highs against most pairs by the London fix. Into the afternoon as equities also went two-way the Greenback retreated from highs in most pairs giving bulls a reason to lighten up. GBP low prints in New York were 1.3982 before rallying a full handle higher to end the day back in the 1.4080 area after reaching the 1.4100 handle briefly in the morning. Traders note that sovereign bids were seen near the lows in both GBP and EURO suggesting that dips are attracting large names as support holds. EURO suffered a similar fate and tracked the GBP lower to extend losses into a 1.2520 low print before rallying back to the 1.2600 handle briefly before settling back to the 1.2580 area; traders note that stops in-range helped to push the rate into lows but dips were bought as shorts covered and possibly new longs entered. USD/JPY extended gains to the 98.00 handle but encountered strong headwinds at the 98.50 area only able to lift to a high print at 98.61 before dropping back. Traders note model accounts active above the 98.00 handle again as they were last week suggesting late buying. The rate closes New York above the 98.00 handle will likely encourage additional buying but sellers are willing into the highs. USD/CHF rallied as well but failed to extend into the 1.1800 handle topping out at 1.1791 before dropping back to the 1.1750 area making the second close above the 1.1700 handle in the past three days suggesting bids are willing on dips but traders note volumes were again on the low side. USD/CAD rallied to a 1.2977 high print in post-London fix action but was unable to hold the 1.2900 handle in late New York dropping to the 1.2880 area in thin conditions. Across the board volatility remained high and the majors covered a lot of the same ground twice; traders remind that there are several market-moving fundamentals due up the next few days and more two-way action is likely. In my view, the budget hearing and testimony from the children currently babysitting the US economy only serve to confuse the fortunes of the USD. Today€™s focus on what the Treasury Secretary had to say only serves to increase the reluctance of the average investor to make a move. Until that changes the underlying fundamentals for the USD will continue to weaken. At some point the dam will burst as holders of USD for reasons that have nothing to do with investment are forced to liquidate. I think the USD is setting up for a massive reversal; get ready for a major shift in sentiment.

Forex Analysis written by Jason Alan Jankovsky, featured by