The USD opens New York mixed this morning, higher against Yen and lower against other pairs. Overnight equities were firmer lending some support to EURO and stocks are called higher to open New York suggesting better tolerance for risk after a quiet weekend.

Overnight comments from ECB president Trichet were seen as positive for the EURO also but traders note the action so far has been largely technical two-way trade. High prints at 1.3737 again drew sellers with lows at 1.3611 attracting buyers on the dips.

Russian names seen on the offer traders say suggesting a possible re-balancing of the Ruble basket. GBP continues to trade higher with high prints at 1.4628 and holding the highs at the start of New York; low prints at 1.4460 also attracting buyers. USD/JPY continues to firm better than the other pairs suggesting that the bulls are still buying the correction.

High prints at 96.80 likely to be attracting exporters in New York with the lows at 95.39 opening with a bid tone in Asia. If the push higher is still corrective then the 96.80 area is likely to draw sellers as the stop-driven break last week started in this area. USD/CHF low prints overnight at 1.1169 were again under the 200 day MA and attracting buyers but the rate remains under pressure in early New York; high prints at 1.1278 are continuing to attract sellers with stops likely around the 1.1320 area now building.

Traders continue to remain wary of SNB intervention but so far no hints at all of support for the CHF. USD/CAD is lower after high prints at 1.2404 again failed to hold above the 1.2420 area; low prints at 1.2297 with the rate holding under 1.2320 in early New York. In my view, the USD is continuing to correct from the recent three-year highs and another leg lower is likely as the key technical support areas in most pairs are under threat again to start the week.

If the majors can continue to advance in solid two-way action then it is a fair bet the USD buyers are thinking the dip is a buying opportunity and the bears are pressing their advantage.

Short-term traders likely will be looking for a bounce in the Greenback and will likely have stops in-range making for potential whipsaw. Larger stops are likely building on both sides of the market as longer-term players continue to work the market from the short side in my view.

Look for more two-way action today and tomorrow as the economic calendar is lighter until later in the week. The majors will likely cover the same ground twice but longer-term traders can hold longs if you have them; I don’t see the USD recovering easily before another leg lower near-term.

Today’s Economic Reports

All times EASTERN (-4 GMT)

•           10:00am USD Existing Home Sales
•           6:00pm USD Treasury Sec Geithner Speaks

Overnight Asia/Europe

•           USD mixed in two-way trade
•           Traders note mostly technical action, some stops seen
•           Majors retain a bid tone into New York

Looking Ahead to Tuesday
All times Eastern (-4 GMT)

•           6:00am USD FOMC Member Evans Speaks
•           10:00am USD Fed Chairman Bernanke Testifies
•           10:00am USD HPI m/m
•           10:00am USD Richmond Manufacturing Index

Forex Analysis by Jason Alan Jankovsky at ForexPros.com. For more
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