The USD opens the week on a softer note and remains under light pressure at the start of New York trade. Overnight action was subdued with most of the action contained in Yen cross spreads after the release of Japan's Tankan report; traders note that the report was very soft and below forecasts prompting some analysts to expect the BOJ to cut interest rates at some point soon. With rates at .3% from the BOJ it is difficult to expect that a rate cut would help much as the bank has held effectively a zero-rate policy since the 1990's; USD/JPY is lower at 90.74 with highs at 91.37 and lows at 90.47 making for an inside range day with lower two-way action.

Traders report bid interest on the dip to 90.50 area likely from option defense and profit-taking from shorts. Additionally, EURO/JPY was firmer after the Tankan report which helped to support USD/JPY. Both EURO and GBP are steady to mixed with both pairs in technical two-way action. Traders note that both pairs have reached or held technical resistance or projections making the potential for a pullback a bit higher today. With light economic news for this morning traders will likely focus on firmer equities and how they respond to TICS and housing data today. EURO rallied to a high print at 1.3500 before dropping back to test technical support at 1.3350/60 area; low prints at 1.3366. Traders note an Australian bank on the offer into the highs; the rate is firm after the offers opening New York around the 1.3450 area. GBP held Friday's gains initially for a high print at 1.5068 before dropping back with EURO; low prints at 1.4919 holding the 1.4900 handle on the dip.

Traders note that the BOE is unlikely to support the falling GBP and cite room for further rate cuts after the first of the year are likely. If the 1.5000 fails to hold on a closing basis this week the GBP is likely to correct lower some analysts suggest. USD/CHF continues lower, high prints at 1.1767 with lows at 1.1687 making a full retracement off the highs into technical support. Traders note that Gold prices may be finding it harder to move higher by year end keeping a bit of downward pressure on CHF; Oil is higher and they may be lending some pressure. USD/CAD remains under pressure after Fridays' dead-cat-bounce; high prints at 1.2467 with lows at 1.2280 making the pair technically weak in my view. After today's news all eyes will be on the FOMC statement due Tuesday with most analysts expecting a rate cut but differ on the size of the cut. Consensus is for a 50BP cut this week. In my view, the USD is continuing to top but the bulls will likely make a try for gains near-term; any strength in the USD is a great sell in my view.

Overnight Asia/Europe

• USD starts weaker in Asia, two-way action
• Japan Tankan below forecast
• Most pairs at technical S/R

Today's Economic Reports
All times EASTERN (-5 GMT)

• 8:30am USD Empire State Manufacturing Index
• 9:00am USD TIC Long-Term Purchases
• 9:15am USD Capacity Utilization Rate
• 9:15am USD Industrial Production m/m
• 1:00pm USD NAHB Housing Market Index

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

• 8:30am USD Building Permits
• 8:30am USD Core CPI m/m
• 8:30am USD CPI m/m
• 8:30am USD Housing Starts
• 2:15pm USD FOMC Statement
• 2:15pm USD Federal Funds Rate

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