Rate follows GBP lower and cross-spreading likely adding pressure; rate holds a test of 1.2520 area again but rally is needed to hold support zone otherwise another low is likely. Stops building on both sides as the rate tests for stops on the downside first.

Upside stops likely cleared at 1.2630/50 area for now; likely layered above 1.2680 through 1.2750 area now. Key 1.3030 area likely next; failure to hold 1.2900 likely going to be the test for the bulls this week. Close above key 1.3030 area needed for further upside until then rallies likely to be sold so expect more two-way action.

Rate rallies overnight then falls back to test support in NY again, low prints at 1.3982 above major bids said to be around 1.3950 area; shorts are gaining confidence for a break under 1.4000. Rally to clear close in stops above 1.4300 and a close over the handle suggest more upside and a short-squeeze; bounce off the lows back to
1.4080/90 area suggests bids are increasing.

Two-way action between existing S/R the past 72 hours likely to continue. Stops likely building on both sides increasing the chance for whipsaw. Traders report stops in-range adding for two-way action. Long-term tech resistance now at 1.5000 area likely to cap near term but stops are building above and the 1.5000 handle is a big psychological number.

The USD is ending today flat to weaker after whipsawing traders all day in both directions; speculation regarding US stimulus actions and upcoming fundamentals is providing both sides with fuel for their argument. After starting weaker in Asia the USD rallied into New York action today extending highs against most pairs by the London fix. Into the afternoon as equities also went two-way the Greenback retreated from highs in most pairs giving bulls a reason to lighten up. GBP low prints in New York were 1.3982 before rallying a full handle higher to end the day back in the 1.4080 area after reaching the 1.4100 handle briefly in the morning.

The EUR/USD is sitting right on our medium-term uptrend line, holding onto dear life after balancing on our 1.2555 level. The performance of the EUR/USD over the past 24 hours shows us investors aren't quite ready to give up on the medium-term uptrend considering a drop beneath would likely lead to a sharp leg down.

However, the picture isn't pretty, and it's difficult to find a reason why the EUR/USD will turn around and head for an uptrend. With the U. S. economy in shambles, it would take a massive shift in investor sentiment to alter the downwards wave taking place. Investors are waiting for America's Pending Home Sales data coming this morning. Discouraging data could lead the S&P futures below 700 with the EUR/USD following suit.

The USD/JPY continues to stabilize along our 2nd tier downtrend line as investors show hesitation after February's impressive run. While it has been easy to be positive on the USD/JPY over the last month with the Carry Trade unwound and the Japanese economy decomposing at a faster rate than America's, the medium-term downtrend still looms large.

The USD/JPY has significant barriers to break through, including the highly psychological 100 level, before we can feel comfortable with the prospect of a lasting uptrend. If the U. S. should continue to release negative data while the financials crumble, the USD/JPY may be forced downwards with U. S. equities.

The Cable found some support around the psychological 1.40 area as expected despite the large selloff taking place in U. S. equities. However, the Cable failed to close above our 1st tier downtrend line and will likely extend its losses with a possible retest of January lows coming.

The GBP/USD is weakening Tuesday after Britain released a much worse than expected Construction PMI. Therefore, with Net Lending to Individuals and Mortgage Approvals each declining yesterday, the housing crisis in Britain is ongoing.