Jason Alan Jankovsky Morning Dollar Briefing Jan 29th

The USD had a quiet overnight session seeing some late pressure in Europe as traders square books and await the release of US GDP data this morning. Equities followed on weaker in Asia helping to lift the USD a bit but ranges remained tight and volumes low into New York; commodities are mixed but well off highs seen earlier in the month suggesting that the longer-term outlook is leaning to bearish helping underpin the USD bulls today.

Overnight chatter focused on the debt situation in Greece with officials denying any plans for a bailout with comments from investors leaning to some sort of plan is needed; uncertainty is working against the EURO into this morning with upside limited ahead of the news.

GBP low prints at 1.6107 holding the support area around the figure with high prints at 1.6181 holding under first line of tech resistance. Traders note that stops are building under the 1.6100/1.6090 area suggesting that a break under recent support is brewing; the bottom of the last week’s range is around the 1.6080 area with more stops likely under there leaving the bulls on the defense into the start of New York.

EURO held a fairly tight range with low prints at 1.3911 followed by highs at 1.3988 making the first day when the rate has had the entire range under the 1.4000 handle since July of last year. Traders note that offers are ready and willing at the 1.4000 through 1.4050 area making potential upside slow-going but stops in size are likely around 1.4080 suggesting the rate is heavily short and needs a corrective bounce to make the bears happy with setting new shorts.

USD/JPY is firmer on the 90.00 handle rising through in-range stops at 90.10 area overnight; high prints at 90.37 found offers ahead of the 90.50 area suggesting the bears are ready to push their advantage. Low prints at 89.57 hold off the earlier lows with volumes said to be on the light side.

USD/CHF high prints at 1.0551 in Asia met with sellers and the rate fell back to clear light stops under the 1.0500 handle for a low print at 1.0481 before regaining the 1.0500 handle. Traders note that general USD demand is keeping the rate firm despite comments from SNB officials that FX intervention won’t be used at this time; normally the soft line by the CB leaves the door open for CHF appreciation.

USD/CAD continues to hover around the 1.0650 area with high prints at 1.0697 in early Asia followed by lows at 1.0621 before bouncing to mid-range; traders note that the rate is vulnerable to a lift back to test offers around 1.0700/20 area where known sellers are waiting. Traders are waiting for US data for more clues to near-term price action but general consensus feels very supportive of the Greenback into the last trading day of the month.

In my view, the USD is due for a pullback and a weaker GDP number may be the catalyst to start a correction but traders are seeing that as a buying opportunity. The USD is starting the year on the offense and upside may extend into February as a firm close on the month gives solid technical support despite fundamental weakness and uncertainty about the speed of the recovery.

Jason Alan Jankovsky

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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.

Jason Alan Jankovsky Morning Dollar Briefing Jan 28th

The USD is trading steady after whippy two-way overnight action; equities markets around the world are mostly higher adding a bit of risk on trade keeping the pressure on after the Greenback lifted a bit in Asia to start overnight. Reports of military action by the N. Koreans near the border with the South created a bit of flight-to-quality buying of USD and several pairs lifted through stops to print new highs before reversing quickly.

US President Obama appeared on TV last night with the state of the union address; debate continues as to which proposals made will actually be implemented and which will create potential price pressure in the FX markets. Obama’s remarks were often general in content with few specifics; especially on the subject of job creation and banking reform; most of the speech was data already known by the markets. Traders are now waiting for US data due this morning with most confident that durable goods data will take a back seat to the vote on Fed Chair Bernanke’s re-nomination. Most expect Bernanke to be reappointed but votes against have risen in the past few days as more is learned on the AIG bailout process; most likely the markets would be pressured lower by any delay in a Bernanke re-nomination adding some upside to the USD but analysts note that the USD has reached upper tech levels with a correction lower very likely on positive news.

GBP slipped to a low print in Asia of 1.6133 dragged lower by the break in EURO before rallying back to lift through 1.6250 area for a high print at 1.6278; traders note stops in-range above the 1.6220/30 and 1.6250 area as expected with offers likely on the approach back to the 1.6280/6300 area as has also been the custom.

EURO slipped through support at the 1.4000/1.3980 area as FTQ buying of USD surged in Asia; low prints at 1.3936 before rallying sharply back to the 1.4000 handle during mid-day. High prints in Europe at 1.4053 effectively reversed the early weakness and puts in a technical reversal if the rate can close firm closer to the 1.4030 area in New York.

USD/JPY is higher lifting from low prints in Asia at 89.86 to clear sops over the 90.30 area after tackling offers from 90.10 to 90/30 area easily; high prints at 90.56 found offers around 90.50 as expected as well but traders warn stops are waiting over the 90.60/70 area with some bulls looking for a test of 91.00 today.

USD/CHF is holding above the 1.0500 handle with a high print of 1.0558 on FTQ in Asia; low prints at 1.0476 found bids ahead of 1.0480 as expected with stops likely under the 1.0460 area today. Traders note that comments by Swiss FinMin that intervention was not needed opens the door for a sharp pull back in the USD near-term.

USD/CAD has broken back under the 1.0600 handle and is leading the complex lower with low prints at 1.0554 so far today; more stops are under the 1.0520/30 area some desks report. A close under 1.0580 puts in a reversal.

In my view, the reversal off the overnight highs after the minor FTQ seen in Asia continues to underscore that the Greenback is topping. Look for more downside as the day wears on.

Jason Alan Jankovsky

FOREX Analyst and Trader

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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.

Jason Alan Jankovsky Morning Dollar Briefing Jan 27th

The USD continued in two-way action overnight extending weekly ranges again against some pairs before reversing as technical S/R areas held the advance in check; the Greenback is mixed in early New York after seeing whippy conditions in European trade.

Traders note that semi-official accounts and sovereigns were seen on both sides of the markets as well as large names covering back losing positions set yesterday; most notably model accounts on the sell side of GBP buying back those positions as Cable extended to the upside again as two-way action continues to punish the longer-term trader.

GBP low prints at tech support were 1.6105 as the rate held up over yesterday’s lows; the rate rallying into late Europe as EURO firmed also. High prints in GBP at 1.6246 so far this morning with the rate on the highs into New York; traders note offers likely around the 1.6160/80 area with overhead resistance said to be quite firm ahead of 1.6300 handle.

EURO dropped in European trade after holding firm most of the Asian session; traders note Russian names on the buy side as the rate tried to sneak under the 1.4030 area for a low print at 1.4020 before rallying. EURO makes a new weekly low but rallies back to the top of the overnight range to hold near 1.4080 with a current high print at 1.4098. Traders note the rate is holding key tech support on three tries suggesting that the market is trying hard to bottom.

USD/JPY broke down to a new weekly low before reversing as well; low prints at 89.12 were enough to test for stops under the 89.20/30 area but the rate spent little time  on the lows. High prints at 89.73 continue to find offers ahead of 90.00 area but traders remind the breakdown area is so close to the recent lows and tech support that a rise to test offers around the 90.10/30 area is very likely near-term.

USD/CHF finally challenges the 1.0500 handle successfully with a high print overnight at 1.0505 before profit-taking broke the rate back to the lows; low prints at 1.0445 in early New York with the rate around 1.0450 area suggesting the sellers are taking control. Overhead resistance has been severe at the 1.0500 handle and the rate is likely to draw larger long-term traders at least once on strength.

USD/CAD tried to follow the USD strength lifting to a high print at 1.0681 before running out of steam; low prints at 1.0606 make for an inside range day and with stops known to be cleared to the upside yesterday and likely today a rotation to test the lows is likely today. Stops said to be in size under the 1.0580 area near-term some desks report. In my view, the two-way nature of the recent action continues to suggest that traders are not certain which direction is more likely at this point as risk acceptance comes and goes and changes in economic potential keep happening at the government level.

Basically, traders don’t want to get positioned for a possible trend because few are certain which direction that trend is likely to proceed in. Short-term action continues to whipsaw the USD the past four days and more is likely today after FOMC and the US President’s speech tonight. Look for traders to square books today ahead of news and action to be fairly well contained to recent ranges.

Jason Alan Jankovsky

FOREX Analyst and Trader

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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.

Jason Alan Jankovsky Morning Dollar Briefing Jan 26th

After a weaker start in Asia dropping to the lows of the overnight ranges the USD is rallying back to make new weekly highs against some pairs as risk-aversion spreads into early New York action. Helped by overnight news the Greenback is extending upside bias clearing stops from larger names and attracting more speculative demand as the majors retreat after mixed news convinced traders to return to the USD in fear that the US equities market is beginning a significant correction.

Overnight equities were lower and DJIA futures are lower suggesting that today will be another down day for traders adding a bit of flight-to-quality buying of USD. Some Chinese banks were ordered to increase reserves starting tomorrow adding a bit of lift to JPY crosses but the BOJ announced a unanimous vote to hold rates steady; SP downgrades Japan potential for recovery and that was enough to reverse bullish sentiment adding pressure to the crosses until stops were hit under the Monday lows.

USD/JPY fell through stops at 89.50/60 area for low prints at 89.36 before bids showed up; traders report model supply under 90.00 as that key support gave way. High prints at 90.56 held upside resistance in whippy conditions.

GBP rallied to a high print at 1.6271 in Asia but began to slide off ahead of UK GDP data; GDP came out lower than expected but still showing signs of recovery. Cable slid under 1.6220 to find sellers all the way under 1.6180; stops from larger names seen as the rate cleared under 1.6150 for a low print in early New York at 1.6100 even. Traders note the rate is under pressure from GBP crosses suggesting the move is more broad-based against Cable.

EURO had positive news from German IFO sentiment index out better-than-expected helping to underpin the rate; high prints in Asia were 1.4180 and the rate couldn’t extend higher. Import prices were up a bit and ECB Nowatny said that the ECB could move rates sooner than the US Fed but traders still held a cautious view and the rate slid back to find in-range stops under 1.4120 before accelerating under 1.4100 for low prints at 1.4067; traders note model supply as well under 1.4100.

USD/CHF rallied back to test the 1.0450 area with a high print at 1.0463 before dropping back a bit; the rate had lows in Asia at 1.0377—not enough to find the large stops noted previously around the 1.0350/60 area. Traders expect offers on a lift to 1.0480 area with stops beyond.

USD/CAD continues to grind into highs lifting to a high print at 1.0660 clearing stops above the 1.0620/30 area; low prints at 1.0543 in Asia found light stops under 1.0550 but bids prevailed.

In my view, the presence of large upside stops underscores that sellers are trying to cap the USD but they are nervous and unwilling to hold positions for very long at this point. Today’s US data could be a catalyst for more whipsaw and I think that shows USD traders are less certain of near-term direction with the long-term large money bears backing off a bit and letting short-term bulls gain control of the market. Tomorrow’s FOMC meeting is looking more uncertain and that may be adding a bit of fear to the markets. Expect more two-way action at these new highs.

Jason Alan Jankovsky

FOREX Analyst and Trader

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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.

Sherman Mohr’s Open Letter to Secretary Stawick of the CFTC

Jason Alan Jankovsky Morning Dollar Briefing Jan 25th

The USD is slightly weaker to start New York after a modest two-way overnight start to the week; traders note that risk-aversion saw a bit of follow through Monday in Asia as most equities bourses were lower as was commodities pricing. Liquidation continues in long Gold positions according to CFTC positions of traders report released Friday suggesting that more selling will continue in that market in turn keeping upside pressure on the Greenback but the USD is in short-term overbought territory some analysts say suggesting that the correlation between commodities and USD might be breaking down. The USD is on the softer side and near the bottom of overnight price action with a light economic calendar for today arguing that trade today will remain technical with the threat of liquidation stops likely under the market adding to potential range. The USDX is holding under last week’s highs with a potentially bearish formation now that the 200 day MA held as resistance suggesting that a dip back to reasonable support may be in the works after last week’s late buying by model and system accounts. Should the USD pull back the drop may be hard and fast as volumes into the highs last week were good arguing that stops might be a bit larger as traders tried to pile into a USD long after the short side has apparently taken a break. GBP lifted to a high print at 1.6177 slightly above the 1.6160 area of S/R but stops were only on the light side suggesting that offers at 1.6180 still are thick. Low prints at 1.6091 actually was a bit of a gap higher suggesting that buyers made the choice to get in over the weekend and with no real news over the weekend it appears technical choices were made. Traders note stops above .6220/30 area with sell side around 1.6060 area.

EURO low prints at 1.4129 keeping the lows from Friday from being challenged; high prints at 1.4195 extended a bit to the upside arguing that the bears don’t have it left over from last week. Traders are watching Greek bond developments and likely positive news there will add a bit of upside to the rate.

USD/JPY is holding firm after an early dip to low prints at 89.80 before rallying back to make highs at 90.35; traders note that demand is willing under the 90.00 handle and Yen crosses were in demand from Friday giving a bit of a boost. Stops likely in the 90.50/60 area with offers ahead.

USD/CHF continues to grind lower after highs seen last week; high prints at 1.0425 on low volumes some desks report with lows at 1.0366 below the hourly 100 bar MA. Traders note the rate is mostly trading in sympathy with other pairs and is lagging interest this morning.

USD/CAD high prints at 1.0590 as last week’s rally attracted follow-on bids; possibly from momentum traders. Low prints at 1.0530 held S/R from 1.0520/30 area of last week’s capping but the rate is in overbought area some analysts suggest. Likely the rate will need a bit of impetus to get in corrective mode but a long-liquidation break is increasingly likely at this point with a close under 1.0520 area to open the door.

In my view, the USD is looking to correct from last week’s strength and the follow-on start to Monday looks like it will start as a two-way grind and not a sharp break. Look for more backing and filling today.

Jason Alan Jankovsky

FOREX Analyst and Trader

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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.

Jason Alan Jankovsky Morning Dollar Briefing Jan 22

The USD is stabilizing around slightly better levels after showing a bit of early weakness overnight; heavy follow-on selling of the Yen crosses in early Asia brought the USD lower but “buy the dip” thinking appears well-set at this point as the Greenback is back closer to New York closing levels seen on Thursday. Traders report that risk-aversion continued in Asia as equities followed the DJIA lower as did European bourses; commodities pricing having a two-way overnight session also contributed a bit to USD firmness. To start New York the Greenback is lifting back to the overnight highs as traders continue on the buy side although volumes have been light into the start of New York and a long-liquidation break can’t be ruled out as traders cover ahead of the weekend. Technical trade is expected with no news on the block for today.

GBP low prints at 1.6163 in early Asia are under threat to start NY action; the rate dropping back from highs quickly in late Europe to trade around 1.6180 at writing. High prints at 1.6286 saw stops above 1.6200 and 1.6250 cleared on the way higher from late sellers with offers above 1.6250 apparently in size; traders note that whippy conditions are expected should the rate find another round of short covering off the lows. Traders note that weak UK retail sales data adding to the selling pressure.

EURO followed GBP higher clearing stops above 1.4130/50 area on the way to a high print at 1.4165; traders report “black box” stops seen above 1.4160 with more expected above 1.4180 area. Low prints in early Asia at 1.4064 found profit-taking from shorts suggesting that the move to the Thursday lows may have been it for the sellers near-term; the rate is holding 1.4100/20 area to start New York.

The big mover overnight was again USD/JPY as Yen crosses were sold across the board; low prints clearing stops at 90.00 and 89.80 for a low of 89.77 where option defense saw bids lift the rate back to the 90.00 handle. High prints at 90.58 saw light stops above 90.40 area but offers expected ahead of 90.50/60 area capped easily; traders note a bounce off the 89.75 area could see late sellers bail increasing the potential for a sharp rally to end the week.

USD/CHF is grinding lower making lows at 1.0374 before following the USD higher; high prints at the start of Asia never traded twice at 1.0441 and the rate is hovering around 1.0400 to start New York. Traders note that the rate needs a firm close on the 1.0400 handle to keep bulls happy and a dip back under 1.0380 likely will find more stops.

USD/CAD is having a similar two-way session dropping through stops at 1.0480 for a low print at 1.0462 before regaining the 1.0500 handle; high prints at 1.0527 under threat in early New York with traders confirming stops on a break of 1.0530 area with offers expected to cap around 1.0550.

In my view, the early weakness in USD suggests that traders were a bit too excited about a USD rally Thursday and the lift off the overnight lows looks a lot like late buying. Expect two-way technical trade today with a good potential for a long-liquidation break as bulls book gains ahead of the weekend.

Jason Alan Jankovsky

FOREX Analyst and Trader

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Currently an Amazon.com top 100 bestseller under Finance/Futures

Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.

Jason Alan Jankovsky Morning Dollar Briefing Jan 21st

The USD continues to show strength this morning after two-way action at Wednesday’s highs finally gave way to the upside lifting the USD to the best levels in weeks; starting the move higher was short-covering after bears were disappointed early in Asia by the much-anticipated China GDP news. Data was above expectations and initial reaction was muted but whipsaw higher in the Greenback met sellers but those sellers didn’t have what it took to take the USD off the highs and quickly turned buyer into European trade as the majors fell to new weekly lows across the board.

The USDX is now above the 200 day MA reaching technical objectives and some traders are noting that all the major pairs have reached or moved beyond tech objectives suggesting that the Greenback will see a turnaround as profits are booked. Today’s US data is likely to add to this argument as employment and Philly Fed have recently been seen as USD bearish but traders warn that upside potential in the Greenback remains as sentiment is clearly to the buy side near-term.

GBP high prints at 1.6314 in early Asia but the market turned seller into Europe driving through layered stops under the 1.6230/40 area triggering large size for a low print at 1.6123 before seeing a bounce; traders note demand from Mid-east names countered by model supply through the 1.6200 level.

EURO was pressured lower partly in sympathy with GBP as stops under the 1.4080 area were triggered dropping the rate through support at 1.4050 for a low print at 1.4027 before a bounce; high prints at 1.4138 in early Asia saw light stops above the 1.4120/30 area suggesting that shorts have an interest to cover but the dip drew model action as well. The rate is holding back at the 1.4080 area in early New York suggesting the dip into lows was a head-fake and the end of the recent down move as the tech level of 50% fib defense at the 1.4020 area is met.

USD/JPY lifted through stops above the 91.50 area for a high print at 91.87 before meeting offers; traders expect offers layered to 92.00 with stops above suggesting that further upside will likely be a grind with two-way action likely. Low prints at 91.17 make for the first day in over a week that the market traded completely on the 91.00 handle or higher suggesting the turn is in for a retest of the highs above the 93.00 handle.

USD/CHF high prints at 1.0498 before retreating back under the 1.0460; traders note that the close over 1.0420 area yesterday set up some technical buying with light stops above 1.0480 area in place as well. Low prints at 1.0419 argue for more upside as the rate is firmly on the 1.0400 handle near-term.

USD/CAD lifted to a high print at 1.0526 reaching a bit beyond tech S/R at 1.0510 area but the rate is under pressure dropping back to 1.0470 area to start New York suggesting the lift was the end of the move; low prints in Asia at 1.0436 so far today are above S/R at 1.0420/30 making for a bullish set-up for today if the rate can hold above the 1.0480 area

In my view, the overnight strength for the USD is likely exhausted and aggressive traders can look for a pullback to end the week. A buy point in the USD is coming but this latest lift appears a bit overdone; look for the USD to give back some gains today.

Jason Alan Jankovsky

FOREX Analyst and Trader

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Also available my first book: Trading Rules that Work

Currently an Amazon.com top 100 bestseller under Finance/Futures

Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.

Jason Alan Jankovsky Morning Dollar Briefing Jan 20th

The USD is holding solid gains in early New York after a spike higher to start Asia continued to gain traction into European trade; traders note risk aversion was growing in Asia and USD-positive news both supported the Greenback into New York. Equities were lower in Asia starting a bit of upside for the USD, China banks announced they were cutting back on new lending as well as policy statements showed bullish USD wording despite the restriction in credit. Debt ratings organization Fitch downgraded both Cadbury and Kraft adding a bit of downward pressure to the EURO and the special election in Massachusetts was received by traders as potential for less government control/interference in the investment community. All in all a busy night for unexpected fundamentals with the net result a firmer USD heading into mid week.

The big mover was EURO suffering a technical sell-off after closing under the 200 day MA yesterday; traders note that initially active selling was seen by large names in Asia and once stops were triggered under the 1.4250/60 area the rate broke hard and never looked back grinding into new lows all night making low prints at 1.4130 in early New York. High prints at 1.4297 had no interest to the upside and stops are said to be in the 1.4320/30 area with sellers active from the start. Although EURO is under pressure the GBP is holding up fairly well; high prints in Asia at 1.6374 with lows at 1.6242 in early New York. Traders note that stops in size are confirmed under the 1.6250 area with the first try finding a mix of short-covering bids also in that area. Traders expect a drop under 1.6220/30 area to accelerate the move lower and confirm a pullback from the recent highs around the 1.6400 handle.

USD/JPY high prints at 91.37 as the Yen crosses were well-bid in early Asia; the fall in EURO putting pressure on EURO/JPY spilling over into USD/JPY for low prints at 90.77 right on support as expected. Traders note that stops are over the 91.50 area with offers ahead but also expect a try for the 91.80 area on general USD strength should that continue in New York.

USD/CHF rallied as well taking out stops to the upside resting at the 1.0350/60 area clearing to the upside past the 1.0400 handle for a high print at 1.0443; the rate is holding the 1.0420 area in early New York effectively taking out the bears and the potential ceiling around the 1.0380 area. A solid close on the 1.0400 handle opens the door for an extended rally now.

USD/CAD also lifted past the 1.0400 handle for a high print at 1.0450 before capping so far today; traders note that stops above the 1.0380 and 1.0400 area were in size helped by the Canadian CPI data released early this morning. Traders expect a test of the 1.0500 area to hold solid offers on the first try but stops are beyond in size some desks report. In my view, the turnaround in the USD was a bit of a surprise given the lack of real follow-on buying yesterday near the end of the day; traders have pushed the Greenback back into the bull mode I think and pullbacks will be bought.

Look for today’s US data to whipsaw the majors a bit.

Jason Alan Jankovsky

FOREX Analyst and Trader

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Also available my first book: Trading Rules that Work

Currently an Amazon.com top 100 bestseller under Finance/Futures

Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.

Jason Alan Jankovsky Morning Dollar Briefing Jan 19th

The USD is mixed this morning after a busy night of fundamental data; traders playing catch up after the pseudo-three-day weekend in the US found themselves scrambling to cover open positions set in good faith on Monday’s quiet Asian and European action that showed continuation patterns in most pairs. Debt ratings agency Fitch released comments on Spain, Portugal and Greece economic conditions that might result in downgrades of sovereign debt catching EURO traders by surprise and helping to accelerate a pullback off the overnight highs;

German ZEW index also showing a slight drop added pressure and the rate hit stops under the 1.4380 area after a steady climb on Monday. High prints in the rate overnight at 1.4416 saw regular buying from typical names suggesting the market was not expecting poor news today. Low prints in late Europe after the news at 1.4296 as longs quit into the start of New York action. Initially stronger on rumors that Kraft foods will buy Cadbury GBP lifted to early highs above the 1.6400 handle after a solid climb on Monday; UK CPI out at higher-than-expected numbers saw shorts bail and new buyers come in lifting the rate to a high print at 1.6460 before offers capped the move. GBP dropping back a full handle in early New York around 1.6350 shows that the buyers don’t have the firepower to extend the rate above the 50 day MA with confidence and sellers likely will create a reversal mid-week.

USD/JPY continued a slow grind lower after steady trade Monday; low prints under 90.50 at 90.30 surprised some traders with model accounts noted on the offer suggesting the rate is oversold again. Solid buying of the Yen crosses was seen and the rate is back testing the 91.00 area with high prints overnight into New York at 90.91 so far this morning. Rumors of JAL filing for bankruptcy protection proved to be accurate and that may have pressured the Yen a bit.

USD/CHF rallied to clear stops above the 1.0280 area which proved so hard to clear last week; a slow start to the week on Monday left shorts comfortable to hold but the lift into the 1.0300 handle is forcing them out in early New York. Low prints at 1.0227 were above solid support at 1.0220 with highs at 1.0340 so far this morning.

USD/CAD is lagging again as the USD finds support to start Tuesday; low prints at 1.0247 were inside range with highs at 1.0302 in early New York keeping the range tight for now.

Traders note that in all pairs action has been a bit confused as the markets react to overnight news possibly setting the stage for more whipsaw later in the week. Action into New York has been one-way suggesting liquidation by the USD shorts caught wrong-footed and keeping the door open for a technical reversal in USD depending on how well the longs push their advantage today. Equities lower this morning is helping a bit and with early earnings from some major US corporations due this week it could be a choppy next few days from that contrary indicator so heavily relied on of late. Look for the USD to attempt an extension of the ranges today as most major pairs are still setting up for a larger move. US data is thin today so expect a quiet grind for most of the day.

Jason Alan Jankovsky

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