Despite a weaker open and a test of near-term S/R the USD has recovered to post highs against some pairs as intraday volatility continues. Equities faded into the middle of the day unable to hold early gains helping to push the majors to lower prices in two-way volatility. Crude giving up gains also was a factor for lower EURO pricing traders say but for the most part the majors are struggling to hold support against negative sentiment as traders continue to wait for signs that the financial crisis is mitigating.

GBP had early highs at 1.5072 before dropping two full handles in late trade; traders note selling sympathy with EURO and cross-spreaders adding to the volatility.

EURO high prints looking for stops at 1.2767 but traders note they were not in size over the 1.2750 area suggesting that stops are higher up or that they were cleared last week making for a potential rotation lower in the works as the rate failed to advance past the weekly opening range.  

USD/CHF continued to sketch out a tight range failing to extend in either direction as early highs and lows held all day. Traders note that stops are likely building in size on both sides of the rate as other pairs extend ranges suggesting more volatility may be due soon.

USD/CAD rallied through upside resistance for a high print at 1.2585 clearing stops above the 1.2540/50 area; traders note that uncertainty in the new Canadian government likely has pressured Loonie lower against the USD.

Traders note that the rate has had really thin volume and today's moves may have been exaggerated but the fact is the rate has extended above near-term resistance suggesting that the rate may try for the next resistance level above the 1.2700 area. In my view, today's action is two-way within existing ranges with a few exceptions but volumes haven't been that impressive.  Most likely the USD is continuing to trade in a consolidation bias until Friday's NFP report.

Tomorrow's data will likely provide a bit of volatility but I think the market is waiting to see the extent of the employment data this week. Look for the USD to quiet down overnight as the market prepares for US data in the morning.

Today's US Dollar Trading

•           USD recovers from early lows
•           Two-way action driven by stops and cross-spreaders
•           Equities and Oil volatility an issue

Overnight Preview

•           Look for a quiet overnight session
•           USD to stabilize ahead of US data in the morning

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

•           7:30am USD Challenger Job Cuts y/y
•           8:15am USD ADP Non-Farm Employment Change
•           8:30am USD Revised Nonfarm Productivity q/q
•           8:30am USD Revised Unit Labor Costs q/q
•           10:00am USD ISM Non-Manufacturing PMI
•           10:15am USD FOMC Member Kroszner Speaks
•           10:35am USD Crude Oil Inventories
•           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