U.S. Dollar Continues to Weaken

By: ForexPros

The major pairs continued to advance during New York trade as technical traders pressed thin conditions to find reported resting stops in most pairs. Initially firming up at the start of Asia the Greenback gave back early gains as the day wore on with most traders complaining of thin conditions and patchy volumes.

Despite today’s trading conditions the EURO managed to find large stops over the 1.3230 area with more atop 1.3260 for a high print at 1.3380 as additional tech factors gave way above the 1.3330 area; the rate is holding firm into the close near the 1.3350 area. Traders report that stops in the 1.3260 area likely were from model and momentum accounts selling the rate on a failure of the 100 day MA last week.

GBP found stops above the 1.4730 area and continued on cross-liquidation for a high print at 1.4856 and holds the 1.4800 handle into the close. Traders note that in both EURO and GBP attracted fresh buying once stops were cleared suggesting that the rally will have more to go overnight.

USD/JPY failed to hold the 100.50 area dropping through stops around the 100.20 area in light volume for a low print at 100.02; overnight highs at 100.73 went unchallenged in New York and the rate finishes near the 100.10 area with large stops said to be resting under the 99.90 area once again.

USD/CHF was the big mover on the day finding stops layered under the 1.1420 area with large stops said to be around the 1.1350 area; low prints at 1,.1325 before a bounce was seen. Traders note that bids are expected near the 200 day MA which is due to come in around the 1.1260 overnight leaving more room to the downside most expect.

USD/CAD fell into reported support at 1.2180 area with a low print at 1.2173 but found buyers lifting the rate back into the 1.2200 handle. A mid-day rally back to the 1.2260 area on news from the BOC left only intraday longs to liquidate later as the shorts appear secure. The rate ends around 1.2210 area with more losses expected if stops under the 1.2170 area are in size. For the most part, today’s USD trading is setting the stage for more losses but two-way action is likely as conditions were thin across most pairs; any bounce higher in the USD is likely a selling opportunity.

Upside for the GBP is likely to be capped somewhere around the 1.4950 area, EURO likely around 1.3420 with downside bids in the other pairs likely near recent lows. Although the Greenback is under threat there are still good bids due on dips suggesting that shorts will likely cover back on further weakness setting the stage for a mid-week rally. Tomorrows US economic data is not expected to be a surprise leaving the majors to back-and-fill overnight and likely respect near-term S/R. Look for the USD to hold inside weekly ranges but weaken overnight on follow-on selling.

GBP/USD Daily
Resistance 3: 1.4940/50
Resistance 2: 1.4900
Resistance 1: 1.4840/50
Latest New York: 1.4861
Support 1: 1.4580
Support 2: 1.4550
Support 3: 1.4520

Comments
Rate reverses after early weakness, holds support at 1.4600 area. Rate is holding the 100 day MA nicely and aggressive traders can look to buy dips. Pullback being bought by large names traders say. Stops above the market from late shorts around 1.4720 area cleared for yet another time as the rate rallies overnight; large stops said to be around 1.4780 area. Traders note support is likely firm at the 1.4450 area as expected. Close over 1.4900 argues for further gains but tech resistance is firm ahead of 1.5000. Overhead target of the 1.5000 area likely to trade but expect pressure. Traders feel the 23-year lows will likely remain secure. The shorts may have lost control of the market above the 1.4440 area now and if that is the case a test of the 1.5000 area is almost a done-deal. Traders report stops in-range adding for two-way action.
Data due Tuesday: All times EASTERN (-5 GMT)
7:01pm GBP RICS House Price Balance

EURO/USD Daily
Resistance 3: 1.3480
Resistance 2: 1.3420
Resistance 1: 1.3380
Latest New York: 1.3366
Support 1: 1.3150
Support 2: 1.3120
Support 3: 1.3100

Comments
Rate has liquidation break into close-in stops over thin weekend but large names show up on dips traders say taking advantage of conditions. Traders note good sellers above the market but they may be late as traders note protective stops from model accounts around 1.3260 area. Traders report sovereign interest on the dip. Offers waiting back at 1.3330 area overwhelmed and stops above the 1.3360 area cleared. Rate appears solid above the 100 day MA. Foothold over the 1.3500 handle needed to extend to the upside. Rate likely has stops building in both directions; overhead resistance at 1.3330/50 area back in play as initial support expected fails. Long-term bulls are likely still in control of the market and this significant pullback is a buying opportunity in my view. Looking to buy this week again if 100 day MA continues to hold.

Data due Tuesday: All times EASTERN (-5 GMT)

NONE

Analysis by: http://www.Forexpros.com - Written by Jason Alan Jankovsky

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