The USD is on the offensive this afternoon although volumes are light and trade seems driven by rhetoric and technical factors. Traders remain nervous over the delay in passing the bailout bill and adding insult to injury today's testimony by Paulson and Bernanke on Capitol Hill has been largely a repeat of yesterday's discussion suggesting that legislator's are dragging their feet or just plain need to have something told to them twice. Equities have been two-sided as have been traditional hedges such as gold and bonds. Traders note that if much more "talking" instead of "acting" were to continue then investor confidence may begin to turn south.

GBP continued to trade within existing ranges but had a sharp break lower mid-day as the USD had a rally late; low prints at 1.8474 are still a healthy 10 handles off the lows but the charts are looking a bit bearish this afternoon. EURO suffered the same breaking back to new lows in New York trade for a low print at 1.4628; traders note that stops were triggered on new lows in both pairs suggesting that late longs were buying dips.

USD/JPY tried for a new high but has encountered strong resistance at the 106.20/30 area as the pair rallied back from low prints in New York at 105.34 to trade 106.10 late in the day. This kind of whipsaw is to be expected but the key thing is for the rate to hold under the 106.30 area in my view. Swissy rallied as well making new lows this morning then bouncing to new highs this afternoon; high prints at 1.0915 were offered by technical traders but more whipsaw is expected.

Across the board the Greenback is under duress as technical factors favor two-way trade but fundamentals favor lower prices; today's existing home sales again showed a decline but as expected traders are remaining focused on the bailout plan. Should congress fail to reach at least a reasonable agreement the next 24 hours I think the markets will vote "no confidence" in any plan by early next week.

Despite the recent rally in the majors a pullback is to be expected and with the uncertainty it would be reasonable to expect large volatility near-term. If holding USD shorts it is wise to either lighten up or go flat completely. Look to exploit a USD rally by selling into the move should the USD have a retracement.

Today's US Dollar Trading

•           USD covers the same ground twice in two-way action
•           Volumes modest
•           Traders remain focused on bailout options

Overnight Preview

•           Look for the USD to remain two-sided
•           Potential to rally increasing

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

•           8:30am USD Core Durable Goods Orders m/m
•           8:30am USD Unemployment Claims
•           8:30am USD Durable Goods Orders m/m
•           10:00am USD New Home Sales
•           10:35am USD Natural Gas Storage
•           1:00pm USD FOMC Member Warsh Speaks
•           7:30pm USD FOMC Member Fisher Speaks
•           7:45pm USD FOMC Member Plosser Speaks

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