The USD is higher this morning after a slow start on the defense in Asia, the majors making the best levels of the day ahead of European trade. The Greenback is making fresh highs against the majors in early New York as technical trade and cross spreaders pressure to the upside.

Overnight equities markets were lower adding to the upside as well. The big mover this morning is GBP dropping through several levels of technical support finding stops layered underneath recent lows as EURO/GBP traders sell the GBP side of the cross. Stops under 1.4050 and 1.4000 area gave way to a test of the 1.3950 area and stops were larger on the dip traders say suggesting that lots of bulls came to the table near the 1.4000 area last week.

Low prints in GBP at 1.3874 dropping the rate to levels not seen since last year; high prints at 1.4185 in the Asian session. EURO is testing the downside as well, low prints at 1.2573 with highs at 1.2726 and traders note stops under the 1.2620 area and tech support holding initially at 1.2580 area.

Cross-spreaders on the buy side supporting into the dip traders say but it is still under pressure with large names and semi-official buyers usually active at these levels but no reports of such buying as yet. USD/JPY high prints at 99.18 with exporters active into the Asian highs above 98.50 traders say; volumes have been light with stops in-range lifting the pair over the 99.00 area.

The rate is expected to meet headwinds above the 99.00 area most think but warn that a test of the 200 day MA around the 100.00 area can’t be ruled out.

USD/CHF is back on the 1.1600 handle with highs at 1.1654; lows at 1.1533 attracting technical buying off the 100 day MA. Traders note that the EURO/CHF cross active on the buy side today after reports that a SNB governor mentioned that the Swiss Franc is “being constantly monitored” suggesting that intervention is a possibility but most traders see that as unlikely.

USD/CAD is also higher lifting into stops above the 1.2880 area for high prints at 1.2939; the rate is holding the 1.2900 handle in light trade in early New York but offers are expected to be heavy on any further advance. Stops in all pairs likely to drive trade during the day as technical levels intraday have likely attracted both sides so a whipsaw in the Greenback can’t be ruled out.

With the USD’s propensity to cover the same ground twice daily the past few weeks it would be reasonable for USD bears to sell into this overnight action; high volatility is a usual thing when a market is at a potential turning point and in my view the USD is simply remaining in two-way trade into its recent highs

once again. With a light economic calendar due through tomorrow I would expect more two-way technical action and I would look to sell rallies in the Greenback.

Today’s closing levels will likely be more significant into tomorrow’s action so if we get a neutral close in the USD today I would look for a rotation lower for Tuesday.

Today’s Economic Reports

All times EASTERN (-4 GMT)
•  NONE

Overnight Preview

•  USD gaps lower in Asia, rallies in Europe
•  Two-way technical action, stops drive trade
•  Traders note cross-spreaders in GBP active

Looking Ahead to Tuesday
All times Eastern (-4 GMT)

•  7:30am USD Fed Chairman Bernanke Speaks

•  9:00am USD IBD/TIPP Economic Optimism

•  9:00am USD Wholesale Inventories m/m

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