The Greenback is mixed to end New York after a whippy start to the week. Initially weaker in Asia, the minor holiday along the Pacific Rim slowed action until the start of European trade. The USD gained a bit on the EURO and GBP as UK data was mildly supportive for Cable but was ignored as the New York session got underway.

The release of US housing data was above expectations and the USD rallied into the middle of the day; however technical levels held firm and the USD’s recovery from the thrashing it got Friday is likely to be brief. Both ECB Trichet and US Tres. Sec. Paulson were speaking today and hinted that the USD strength was welcome but Trichet was less than enthusiastic about the USD’s potential to recover. He said that he welcomed the advances seen in recent weeks but warned that the oil shock seen on both continents was the result of “poor policies”; Paulson also said that intervention by the US Fed “can’t be ruled out”.

In my view I think that Mr. Paulson takes the trading community for fools because anyone with any experience at all knows that it is impossible for intervention to accomplish anything of lasting value; the trading community only sees that as an opportunity to add to winning positions. I suppose if the Treasury and the Fed wish to repeat the mistakes of the BOE then we should look to that as an opportunity.

For the record, the GBP reversed from the highs at 1.9804 to close around the 1.9720 area leaving a strong selling wick on the day. EURO had more than a 200 point range today and closed lower but did hold the 50 bar MA in moderate trade. Most desks are expecting the EURO to again rally this week as the fundamentals are surely supporting a higher EURO.

USD/JPY rallied but traders feel this is more in line with Yen weakness rather than USD strength. The rate held the weekly highs from last week and for all intents and purposes the rate is topping at the weekly highs as volumes were light on the move. Look to sell this USD strength the next 24-48 hours. No rush as the majors have a lot of give and take likely to develop near-term; US data is thin this week and may not be a factor.

Today’s US Dollar Trading

• USD two-way is moderate trade
• Majors correct into support but hold firm
• US data surprises to the upside

Overnight Preview

• Look for the USD to trade two-way
• Not a lot of news until later in the week

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

• 8:30am USD Trade Balance -58.2B
• 10:00am USD IBD/TIPP Economic Optimism

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