Forexpros Daily Analysis - Morning session - GMT

Today’s US Dollar Trading
 
• Quiet volumes and subdued price action
• US data encouraging but not market moving
• Traders note thin conditions likely to continue

Overnight Preview

• Look for consolidation and continued two-way trade
• No market-moving news due from overseas

Looking Ahead

• 9:00 AM CDT Tuesday Consumer Confidence forecast 75.0

Summary
The USD is ending New York a bit mixed in Two-way trade as holiday-thinned markets and lack of volume keeps the majors trading sideways. Overnight action was a bit on the buy-side early for USD as there was a slight bout of follow-through buying in Asia but with most of the Asian markets closed the action was light. Into European trade the USD continued to trade two-way and remained in tight ranges until the release of US data. Existing Home Sales were better than expected coming out at 5.03M units sold beating the forecast at 4.86M; inspiring a brief rally in the Greenback. USD/JPY rallied for new Monday highs finding stops over the 100.50 area as expected for a high print at 100.75 before going two-way; most of the day the USD continued to grind higher setting a few highs for a final high print just ahead of the New York close at 100.91. Traders note the rate looks ready to continue advancing in technical action the next few sessions or until resistance at the 102.50/60 area is tested. The Japanese are behind schedule picking a new BOJ chief and that may be adding to the corrective nature of the USD/JPY of late. Cable dropped into the 50 bar MA support area for the second time overnight for a low print at 1.9757 which went unchallenged all day. Briefly touching highs at 1.9879 the rate appears stuck in a sideways consolidation. Aggressive traders can look to add to open shorts above the 1.9900 handle looking for further strength to fail on a test of the S/R area of 1.9950. EURO fell into stops overnight under the 1.5380 area for a low print at 1.5340 making a solid retracement from the highs. A “dead cat bounce” is likely from the 1.5340 area but expect a rally to fail at the 1.5480 area ahead of 1.5550; a short will gain credibility on a test and failure of the 1.5500/50 area in my view. For the most part today the USD remained two-way and consolidative. Traders expect more of the same overnight and with the release of Consumer Confidence tomorrow the Greenback may get another push in the upward direction; but don’t count on it. I think the majors will continue to consolidate and cover a lot of the same ground twice. Expect quiet trade overnight.

USD/JPY Daily

R3:  101.80
R2:  101.50
R1:  101.00/10
Current Price: 100.82
S1:  100.40/50
S2:  100.20
S3:  99.80

Rate continues to gain a foothold for a relief rally but light volumes hamper the potential and are a bit of a warning. Look for volumes to pick up in the coming days as traders continue to debate a recovery; stops likely to be rolled closer to the market. Late shorts will fuel advance short-term so look for offers at technical levels then buy the dips. Rally to the 102.50 area likely to attract a round of early long-liquidation but a correction under the 100.00 area should be short-lived.

GBP/USD Daily

R3:  1.9950
R2:  1.9900/10
R1:  1.9880/90
Current Price:  1.9852
S1:  1.9800
S2:  1.9740/50
S3:  1.9710/20

Rate has a very clear technical pattern and a slight rally is very likely but should hold the 1.9950-2.0000 area on a bounce. Traders note the rate is attracting cross-spreaders who are buying for Yen which should keep the upside pressure on near-term. Look for a test of the 1.9950 area to fail as that level is previous major S/R which has turned resistance. Stops likely under the 50 bar MA and a close under there likely to cause the longs to bail. Bears trying to get control and when they do it’s new lows I think.