The USD is sharply lower to start New York this morning; traders note German economic news and rhetoric from ECB’s Weber providing a lot of the push higher in EURO. Starting Asia firm the USD hovered around NY closing levels early and had a brief bout of buying but reserve manger selling was seen capping the highs for the day and the USD began a gradual slide through the European open.

The big mover on the boards is EURO today breaking through several levels of recent resistance areas and finding stops above the market as well. Beginning the march higher was stronger-than-expected German PPI data marking the fourth month in a row PPI has been higher than expected. Comments from ECB council member Weber suggested that an interest rate hike can’t be ruled out this year sent traders scrambling to cover shorts.

Stops were noted also on the break above the Monday highs at 1.5560/70 area with more above the 1.5600 and 1.5630 area; high prints were at 1.5675 and those after a brief retracement on German ZEW data. Additionally, ZEW President Franz said he agreed with Weber that an interest rate hike by the ECB is likely which sent the EURO rallying back to test the highs before a round of profit taking dropped the rate back to the 1.5640 area to start NY.

Traders note Russian buys at the start of the session linked to rumors of Ruble revaluation but so far that is not confirmed. Cable followed EURO higher and scored a high print at 1.9670 before falling a bit into the start of NY; traders note that technical resistance comes in around the highs and up to the 1.9700/10 area and that may be it on the day.

A surprise by US PPI this morning is likely to encourage a bout of USD selling but with the EURO and Cable above resistance already the worst may be in for the day. USD/JPY dropped under the 104.00 handle but so far stops under the 103.50 area are out of range. Swissy also under the 1.0400 handle briefly but stops again out of range. Today’s PPI will likely offer more volatility.   

USD sharply lower - Morning Session – GMT

Overnight Asia/Europe

•USD sharply lower
•German data surprises, EURO higher
•Cable breaks resistance, also higher

Today’s Economic Reports
All times EASTERN (-5 GMT)

•8:30am USD PPI m/m 0.4%
•8:30am USD Core PPI m/m 0.2%
•9:00am USD Fed Vice Chairman Kohn Speaks
•:00am USD IBD/TIPP Economic Optimism 38.0

Looking Ahead to Wednesday

All times EASTERN (-5 GMT)

•10:30am Crude Oil Inventories 0.2M
•1:00pm Fed Governor Warsh Speaks
•2:00pm FOMC Meeting Minutes

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