US Dollar Remains Rangebound In Forex Trading

Today’s US Dollar Trading
• Volumes light
• USD remains range bound
• No news to focus on

Overnight Preview
• Look for another quiet night
• USD likely to remain range-bound

Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
• 8:10am USD Treasury Sec Paulson Speaks
• 8:30am USD FOMC Member Plosser Speaks
• 10:00am USD House Price Index m/m
• 10:00am USD Richmond Manufacturing Index

Summary
As expected, the USD remained range-bound in thin volumes as today offered little new information for traders to focus on. Technical trading was the rule with most of the major’s pairs remaining between existing S/R levels the entire day. Early USD weakness on follow-through from Asia was met with buying through the London fix but then short-term profit-taking by intraday traders resulted in a quiet close near opening levels for the most part; only EURO showed a bit of bid action to close better on the day.

GBP followed suit but was unable to trade above the opening range for the week and traders note that volumes were light in that pair although recovering above the 200 bar MA for the day suggests higher action is likely for part of tomorrow. How the GBP handles additional bid action is likely to set the stage for the rest of the week as the news picture is not overly exciting for any of the pairs. High prints at 1.9991 were made in NY trade but the rate lacked conviction; traders note that the GBP “feels uncomfortable” above the 2.0000 handle.

EURO firmed through NY as well trading to a high at 1.5893 in late trade but offers are said to be resting above the 1.5900 area again; traders expect two-way action in the rate overnight. USD/JPY continued to remain bid but was unable to close higher than the 107.00 area suggesting that the USD is near the highs for the next 24 hours; traders were interested to see a close over the 200 bar MA but the Greenback just didn’t have it in it today. Lighter volumes across the board may have exacerbated the ranges and the closes today but for the most part technical S/R is holding from last week.

In my view, a rotation lower by the USD overnight is likely as Asia is back from a minor Japanese holiday and there will likely be some catching up by Tokyo traders. I would look for the USD to hold last week’s lows against most pairs and rotate higher on technical factors again.

I’m looking for Tuesday to be a repeat of Monday’s trade with no real extension of the ranges. Although we haven’t gotten the numbers needed to add to our open shorts in GBP and EURO, I would like to give it one more day before liquidating those positions. Look for another quiet day on Tuesday.

Posted in Categories: Contributor, External Research, Forex.

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