Today’s US Dollar Trading

• USD two-way, ends flat
• GBP has higher volatility
• Technical trade continues from AM

Overnight Preview
• Look for continued consolidation
• Asia closed for Japan holiday

Summary
The Greenback ends quietly in pre-report trade after a two-way session that saw most action ahead of the London fix this morning. Traders note that stops helped in light action as close-in positions were trimmed ahead of FOMC on Wednesday. Volumes were on the modest side as expected and some pairs may have extended their range intraday only because thin conditions gave traders a reason to look for stops. GBP rallied on no volume and whipsawed both sides again today as getting on a reasonable trend appears to be difficult for everybody. Initially firm overnight on cross-spreading the GBP held gains after stops found the 1.9900 handle; after falling back and then rallying again for a high print at 1.9968 the rate fell back under the 1.9900 handle twice after short-lived rallies. Ending the day off the highs and on the 1.9800 handle the rate looks like it will rotate lower and look for stops under the 1.9800 handle tomorrow. EURO finished flat in the middle of the range making for a classic “doji” formation suggesting the rate will continue sideways until data on Wednesday. Poor European data failed to inspire the bears for another leg lower and the risk of a short-squeeze is on the table after support at the lows was found at 1.5592; right on fib defense in my view. USD/JPY managed a new weekly high but volumes were light and book-squaring was noted ahead of the Japanese Gold Week holiday; traders in Asia will be out until Wednesday so look for quiet trade tonight in Asia to start. Other pairs were also sideways with USD/CAD making the most noise on the day. Traders note that most of the action continues to be dominated by technical trade with S/R expected to continue to remain as defined from last week. New highs or lows outside of last week’s range are not expected until perhaps Wednesday; traders expect volatility on the day as FOMC is announced and also ADP private payrolls. Look for a quiet night tonight with most action at or around the late European and early New York action.

GBP/USD Daily
Resistance 3: 2.0020
Resistance 2: 1.9980/90
Resistance 1: 1.9950/60
Latest New York: 1.9897
Support 1: 1.9850
Support 2: 1.9790/1.9800
Support 3: 1.9750

Comments
Rate bounces nicely on lighter volume, should be a “dead cat bounce” Closing under the 1.9800 the next 24 hours likely set the stage for a return to lower prices early in the week.

Upside is limited in my view but ranges can be wide as evidenced by the past few days of trade. Sell rallies if not short; buying dips dangerous in my view.

Drop to under the MA’s very important in my view. Long selling wick makes sell side attractive for further losses. Need down bars with higher volume to confirm.

Forex Analysis by Jason Alan Jankovsky at ForexPros.com. For more details about Forex Trading and Tips for decent earnings through Forex Trading, Please check http://www.forexpros.com