Rate fails at support and clears large stops under 1.3200; rate likely has stops building in both directions but shorts have taken control of the market as the rate gives back gains over the 1.3400 area last week late.

Action remains two-way; stops under 1.3150 area said to be building in size suggesting the rate has another leg lower coming near-term. That dip would be a buy opportunity in my view. Overhead resistance of 1.3350 area now back in play; expect sellers in that area on a rally.

Rate falls through stops into support around the 1.4100 handle overnight; traders report more stops waiting under 1.1400 with bids around 1.4050 for the day. Bulls need to be on the sidelines at this point. A close back under the 1.4250 area argues for more losses.

Traders report large names on the dips last week but they may have been whipsawed out to start this week. Overhead resistance now drops to 1.4380 to 1.4440 area; overhead target of the 1.5000 area likely to be on hold with a test of the lows first possibly creating a range.

The USD firmed up overnight as follow-on selling found stops in the majors. Overnight news that Spain will offer its first bailout during the current financial crisis pushed EURO into stops under the 1.3200 area and below keeping the rate under pressure throughout the evening. Bids ahead of 1.3150 offered initial support but traders note more stops under the 1.3150 area are building. High prints in Asia at 1.3287 were offered by a US bank traders say. Adding weight are lower equities; markets reacting to news that the US government will not support the current plans by GM and Chrysler and may be looking for a bankruptcy.

The USD/JPY continues its struggle with our 3rd tier downtrend line as it tries to ascend past key February highs. The next 24 hours are crucial for the USD/JPY. For if the currency pair can climb past February highs then we will finally see a retest of 100 with the possibility of large near-term gains.

On the other hand, if the USD/JPY can't brave through February highs within this time frame, we could very well see the currency collapse back into its downtrend with a movement towards our near-term uptrend line.

With key economic data coming from both Japan and the U. S. in the next 24 hours, the USD/JPY will certainly have the fuel to ignite a fundamental movement in either direction.

The Cable is weakening below our uptrend line while approaching the psychological 1.45 cushion. The Dollar is experiencing relative strength against the Pound due to the combination of yesterday's better than expected economic data from the U. S. combined with much weaker than expected Retail Sales from Britain today.

In a nutshell, this week's data reveals that inflation is rising rapidly in Britain while consumption slows. Meanwhile, both America's and Britain's central banks have lowered their benchmark rates to record lows while implementing quantitative easing.

The EUR/USD popped up yesterday after Timothy Geithner admitted that there may be a better international currency reserve than the U. S. Dollar.

However, Geithner later clarified that he believes the U. S. Dollar will continue to play a key role in international reserves and transactions. The stability of the U. S. Dollar has been thrown into doubt in the face of historical governmental spending and the Federal Reserve's planned use of quantitative easing.

Analysts are anticipating massive inflation in the U. S., or an extreme depreciation of the Dollar against major currency pairs. Therefore, governments are voicing their opinion concerning the domination of the U. S. Dollar before the G20 summit.