The USD continued to whipsaw today losing important ground against the majors as the lack of fundamental news kept traders focused on Equities and Energy. Although crude oil prices have stabilized today without a large swing either way, equities continued to soften in two-way action pressuring the Greenback into lows late in the New York session.

With little to focus on besides equities and energy, traders were mostly sidelined unless prices moved to a particularly attractive area for most players; desks reported that volumes were very light all day and may have contributed to exacerbating the losses seen. Cable rallied off low prints at 1.9671 to post a new high for the day at 1.9824 but traders again noted thin conditions. Stops in expected areas indeed helped the action but the rate is not expected to continue higher without help.

EURO also rallied but stalled again at the 1.5750 area and drew protective option selling ahead of the 1.5770/80 area; high prints at 1.5750 exactly apparently left the option barrier intact near term. Sellers included recent Asian sovereigns traders say suggesting the rate is topped for now.

USD/JPY was unable to break the overnight high on whipsaw volatility and fell to new lows as stocks wilted; stops were elected again under the 107.00 handle for a low print at 106.76; traders note that the rate has lots of sell interest on rallies this week suggesting the rate will not be able to break offers resting at 107.70/80 area.

USD/CHF also dropped but was unable to uncover resting stops said to be in the 1.0270 area; low prints at 1.0276 drew bids and the rate briefly managed a few hours over the 1.0300 handle into the close; close under the 1.0300 handle today seen as opening the door for further losses this week. Our orders to sell GBP on this rally were filled and new orders for USD shorts are working.

Most likely we will need to adjust those orders tomorrow as the Greenback doesn’t look very healthy near-term. Look for more two-way action and a rally by the USD as the two-way action will likely remain ahead of US data in the morning.

Today’s US Dollar Trading

•USD remains two-way, volumes thin
•Majors hold support, USD fails late in the day
•Equities and Energies in focus due to light data

Overnight Preview

•Look for the USD to continue two-way

•Book-squaring ahead of US news possible overnight

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

•8:30am USD Unemployment Claims
•10:00am USD Fed Chairman Bernanke Testifies
•10:35am USD Natural Gas Storage

Claims likely to be main focus tomorrow.

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