The USD is firming into the New York close after remaining two-way all day; US data helped the Greenback a bit as it came in slightly positive. Firming stocks after the weakness early in the day a positive for some pairs as well. Excessive volatility worked against both sides today as most pairs were whipsawed over close to a 100 point range during the day.

GBP failed to attracted bids after initially dropping to the 1.9930 area after the highs early in New York at 2.0009; a minor bounce to the 1.9960 area was sold and the rate dialed to hold gains finishing back near the 1.9930 area. Technically the GBP appears to be forming a top as volumes were light and the crosses are correcting lower on the GBP side.

EURO had the highs challenged around mid-day after falling back from the 1.5820 area in the morning; lows were set at 1.5722 before a rally extended the highs above the 1.5820 high for another high print at 1.5828 before retreating; EURO dropped back to the 1.5780 area on the close and looks vulnerable to topping as well.

Today’s ISM data helped the USD against the majors but was still considered benign, the two-way whipsaw against the GBP and EURO most likely due to oil volatility and equities pricing. USD/JPY held support at the 105.20/30 area with a low print at 105.22 before rallying all day to close back above the 106.00 handle; overnight highs at 106.40 likely to hold further offers with stops layered above.

Traders note that the Yen crosses will likely drive near-term sentiment in USD/JPY as the US data due out this week is fairly well expected to be USD neutral to unfriendly. Tomorrow’s ADP private payrolls data is highly inaccurate and will likely create volatility but no real direction.

The USD is likely to remain under upside bias until the Thursday NFP data but expect two-way action and a lot of whipsaw as the USD corrects higher back to near-term resistance. I would look for the Greenback to rally another two handles before the selling pressure comes on in force again. Expect two-way consolidation again overnight.

Today’s US Dollar Trading

• ISM better than expected
• USD falls to support and then rallies
• EURO fails at resistance

Overnight Preview

• Look for the USD to consolidate in two-way action

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

• 7:30am USD Challenger Job Cuts y/y
• 8:15am USD ADP Nonfarm Employment Change
• 10:00am USD Factory Orders m/m
• 10:30am USD Crude Oil Inventories
• 11:00am USD Treasury Sec Paulson Speaks
• 12:00pm USD FOMC Member Mishkin 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