After a quiet and slow start overnight the USD rallied hard after the release of better-than-expected Consumer Confidence data to post the best levels of the month against most pairs. Although not a closely watched indicator, today’s Consumer data was enough to rally US equities which started the general climb by the USD until stops above the market were elected in size as had been rumored.

Perhaps making for a self-fulfilling prophecy, the majors fell back through waves of stops were hit as traders bailed on long positions once news lows for the week were traded. Across the board the USD rallied and held firm after the London fix and into the close with strong volumes available to mark the USD higher.

GBP fell through the 1.9840/50 area early in the day and pressured offers resting around the 1.9800 area until the stops were triggered taking the rate to a low print at 1.9759 in the afternoon. Not able to recover as of this writing the rate remains near the lows at 1.9778 area. EURO fell in sympathy as well finding stops at 1.5700, 1.5660, and what appears to be long-liquidation stops at 1.5600 for a low print at key support at 1.5550 area; low print at 1.5552 before bouncing.

Post liquidation rallies in all pairs were dismal and the USD appears to have potential to consolidate these gains overnight. USD/JPY rallied past the 108.00 handle for a high print at 108.31 before offers capped the move; traders say exporter offers and long-liquidation selling plus long-term players and semi-official selling made for a hard top; traders expect the USD/JPY to fall back despite the firmness seen elsewhere.

Both Swissy and Loonie are topping as well I think and the next 24-48 hours of hard US data likely to increase volatility a bit. Look for the USD to consolidate these gains and perhaps have a bit of two-way trade or early profit taking but if US data is dollar-friendly then the USD may have another leg higher in store near-term.

Aggressive traders need to be ready to sell into this rally as the move is at key resistance across the board.  The next day or so we will have short trades.

Today’s US Dollar Trading

•           USD rallies hard after US news
•           Stops drive a lot of trade
•           Volumes larger

Overnight Preview

•           Order boards wiped clean so expect consolidation
•           Whipsaw likely around US data in the morning

Looking Ahead to Wednesday
All times EASTERN (-5 GMT)

•           8:15am USD ADP Nonfarm Employment Change
•           10:35am USD Crude Oil Inventories. ADP likely to be the big news for the day.

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