The USD is mixed this morning after starting better in Asia overnight; traders note follow-on buying of USD and technical factors contributing to the weaker majors. With the exception of USD/JPY, risk aversion and general concern for the health of the financial sector has driven the USD to new highs across most pairs.

Traders note lots’ of stops as the rates made new highs but offers were mixed in as well suggesting that the markets may not be one-way at current levels. Initially opening slightly lower in Asia, EURO continued lower throughout the Asian session and into European trade as stops were triggered on several new lows. Eventually making a low print in late Europe at 1.3542 the rate is bouncing in early New York back to the 1.3600 handle.

Traders note failure last Friday at the 1.3800 handle may have encouraged technical sellers on the open overnight and the rate failed to attract good buying until hitting stops under the 1.3600 area. GBP followed the EURO lower but is holding off new lows; low prints at 1.7515 are above the previous August lows.

Oil prices are sliding this morning as well and that is likely pressuring both EURO and GBP lower a bit. USD/JPY is the only pair lower on the board this morning, low prints in late European trade at 102.84 as the Yen continued to climb against everybody overnight. Traders report lots of stops on the break lower under the 104.40 and 104.00 areas.

For the most part the Greenback is benefiting from risk aversion trade more so than the fundamentals. As we know from recent data, the US economy is heading into recession and the Fed will likely lower rates this month; along with falling equities the environment is ripe for a USD fall. Until the market is convinced that the financial crisis is moderating the USD will likely remain bid. The situation is like a flight to quality of sorts; once the crisis is handled the USD will sell off.

In my view, the USD is likely at a near-term top as most of the majors are oversold. The question is when will a long-liquidating break happen. Look for continued technical trade today. Aggressive traders can look to buy technical support in the majors today as the bottom is likely very close.

Overnight Asia/Europe

•           USD mixed, traders report technical trade
•           Oil lower helping pressure EURO
•           Stops drive a lot of trade

Today’s Economic Reports
All times EASTERN (-4 GMT)

•           1:30pm USD FOMC Member Fisher Speaks

Light day across the board for Monday next week.

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

•           11:00am USD FOMC Member Stern Speaks
•           1:15pm USD Fed Chairman Bernanke Speaks
•           2:00pm USD FOMC Meeting Minutes
•           3:00pm USD Consumer Credit 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