After a strong overnight session the USD held overnight highs across the board failing to extend the current rally during US trade today; as expected ISM data came in neutral-to-weaker giving the Greenback a bit of a pause this morning.

Although trading at significant highs to start the week the USD has failed to attract aggressive new buying traders say and in fact has given back some gains to make lows for the New York session against Swissy; other pairs remain mired in two-way action. Cable bounced nicely off the early NY lows for a full handle before settling back; traders note stops were the main driver of the rate. Following Cable was EURO naturally; also making NY highs above the 1.4540 area the rate fell back in quiet two-way action as well.

Despite the large drop in Oil the EURO was able to hold important support at the 1.4460/70 area so far today and traders note that both GBP and EURO were seeing signs of stabilizing; both pairs continued to see profit-taking bids on the drops all day.

USD/JPY has gone nowhere today making all its moves overnight and failing at the 109.00 handle to close in the 108.70 area; traders note that the resignation of Fukuda overnight was largely a non-event.

For the most part today the Greenback remained inside the ranges established in the first few hours of early NY today; despite a rally in stocks and a slight recovery in oil the majors were simply not going anywhere after the day got started. On the block tomorrow the major news is likely to be the Beige Book but traders do not expect anything in there to either favor or hurt the USD.

Analysts remain convinced the US economy has more sideways consolidation or even retreat to go first before a significant amount of data is seen to inspire confidence in a recovery.

Traders look for the USD to remain under upward pressure but admit that the USD is due for a correction. In my view, the majors are overextended to the downside and are showing signs of a near-term bottom. With sentiment favoring further declines yet an overextended technical picture it seems reasonable that a relief rally is due soon.

Look for the USD to trade sideways tonight ahead of US data tomorrow.

Today’s US Dollar Trading

•           Most of the action was this morning
•           USD holds gains but weakens into the end of day
•           Traders note profit-taking bids in the majors

Overnight Preview

•           Likely a bout of short-covering due
•           Quiet ahead of US data

Looking Ahead
All times EASTERN (-4 GMT)

•           7:30am USD Challenger Job Cuts y/y
•           10:00am USD Factory Orders m/m
•           All Day USD Total Vehicle Sales
•           2:00pm USD Beige Book

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