The Greenback ends quietly in pre-report trade after a two-way session that saw most action ahead of the London fix… … this morning. Traders note that stops helped in light action as close-in positions were trimmed ahead of FOMC on Wednesday.

Volumes were on the modest side as expected and some
pairs may have extended their range intraday only because thin conditions
gave traders a reason to look for stops. GBP rallied on no volume and
whipsawed both sides again today as getting on a reasonable trend appears to
be difficult for everybody. Initially firm overnight on cross-spreading the
GBP held gains after stops found the 1.9900 handle; after falling back and
then rallying again for a high print at 1.9968 the rate fell back under the
1.9900 handle twice after short-lived rallies. Ending the day off the highs
and on the 1.9800 handle the rate looks like it will rotate lower and look
for stops under the 1.9800 handle tomorrow. EURO finished flat in the middle
of the range making for a classic “doji” formation suggesting the rate will
continue sideways until data on Wednesday. Poor European data failed to
inspire the bears for another leg lower and the risk of a short-squeeze is
on the table after support at the lows was found at 1.5592; right on fib
defense in my view. USD/JPY managed a new weekly high but volumes were light
and book-squaring was noted ahead of the Japanese Gold Week holiday; traders
in Asia will be out until Wednesday so look for quiet trade tonight in Asia
to start. Other pairs were also sideways with USD/CAD making the most noise
on the day. Traders note that most of the action continues to be dominated
by technical trade with S/R expected to continue to remain as defined from
last week. New highs or lows outside of last week's range are not expected
until perhaps Wednesday; traders expect volatility on the day as FOMC is
announced and also ADP private payrolls. Look for a quiet night tonight with
most action at or around the late European and early New York action.

GBP/USD Daily

Resistance 3: 2.0020

Resistance 2: 1.9980/90

Resistance 1: 1.9950/60

Latest New York: 1.9897

Support 1: 1.9850

Support 2: 1.9790/1.9800

Support 3: 1.9750

Comments

Rate bounces nicely on lighter volume, should be a “dead cat bounce” Closing
under the 1.9800 the next 24 hours likely set the stage for a return to
lower prices early in the week.

Upside is limited in my view but ranges can be wide as evidenced by the past
few days of trade. Sell rallies if not short; buying dips dangerous in my
view.

Drop to under the MA's very important in my view. Long selling wick makes
sell side attractive for further losses. Need down bars with higher volume
to confirm.

Data due Tuesday: (All times EST (-5 GMT)
Forecast Prior

4:30am

GBP

Mortgage Approvals

65K

73K

4:30am

GBP

M4 Money Supply m/m

0.8%

4:30am

GBP

Net Lending to Individuals m/m

8.4B

9.8B

4:45am

GBP

BOE Governor King Speaks

6:00am

GBP

CBI Distributive Trades Realized

-3

1

7:01pm

GBP

Consumer Confidence

-20.0

-19.0

EURO/USD Daily

Resistance 3: 1.5750

Resistance 2: 1.5720/1.5730

Resistance 1: 1.5690/1.5700

Latest New York: 1.5646

Support 1: 1.5590/1.5600

Support 2: 1.5550

Support 3: 1.5520

Comments

Market has failed at 1.6000 area resistance with confidence now, be patient
on the potential break. Overhead resistance is heavy above the 1.5750 area;
traders say offers extend into the 1.5800/30 area with stops above.

Two-way trade at resistance to start on Monday suggests a deeper pullback is
in the works.

Strong long-liquidation break is still coming; look for a test of the lows
again within 24 hours. Watch for two-way volatility. Be ready to add quickly
if a rally happens; likely to fail quickly.

Today a close back under the 1.5600 handle very important; look for a test
of the 1.5550 area early this week, offers likely on a rally to 1.5700 area

Looking Ahead

All times EASTERN (-5 GMT)
Forecast Last

9:00am

USD

National HPI Composite-20 y/y

-12.1%

-10.7%

10:00am

USD

Consumer Confidence

61.5

64.5

These are no factor in my view-look for continued technical trade.

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