The USD is ending the day heavily mixed to start the week. Initially firmer in overnight Asia the Greenback gave… … back hard-won follow-on gains from
European trade at previous S/R areas against most major pairs.

Cable advanced on cross-spreading demand to post a high print in New York for the
day at 1.9635 making the day an outside-range engulfing bar on the daily; a
strong potential reversal signal from the two-month lows at 1.9441 earlier
in the day. Although the trade was considered a strong signal the volumes
were not impressive suggesting the rate will follow-through only modestly
the next 24-36 hours. EURO rallied back to the potential sell-zone in the
1.5550 area for a high print at 1.5572 before dropping back a bit on the
close. Traders note stops in range triggered on the rally over the 1.5450/60
area overnight; lows at 1.5365 went unchallenged in New York. Model account
demand also seen suggesting that momentum traders are coming in on the buy
side. Also active in USD/JPY, model traders likely had their stops too close
to protect themselves against a reversal suggesting that the EURO and the
Yen will whipsaw traders the next 24-36 hours. Look for a pullback in both
pairs; EURO/JPY also active overnight suggesting the USD will remain under
pressure against the Yen near-term. Highs in USD/JPY at 104.05 were offered
rumored by semi-official names and the rate is off the highs to finish New
York. For the most part, the Greenback had a solid two-way day against most
of the majors and despite the two-way action is holding between established
support and resistance. The GBP likely will follow-through to the upside a
bit but sellers are expected to show at the 1.9680/1.9720 area. EURO has
likely made the high for the week seeing as no real stops over the 1.5550
area were seen today and that is precisely where they would have been if
shorts were active over the weekend; aggressive traders can look to ADD to
open shorts in EURO at the 1.5550 area OB today and tomorrow. Looking ahead,
expect technical trade to dominate ahead of Wednesday's CPI data; Tuesday's
data likely no factor.

EURO/USD Daily

Resistance 3: 1.5600/10
Resistance 2: 1.5570/80
Resistance 1: 1.5550
Latest New York: 1.5535
Support 1: 1.5500/1.5490
Support 2: 1.5450
Support 3: 1.5400

Comments
Bounce is developing nicely, rally over the 1.5400 handle significant. Rate
holds opening range on the fall-back; solid sign of no sellers left. Rally
back from dip under the 1.5400 on stops suggests more losses are coming but
a corrective bounce is needed (which is developing now) Support at 1.5280 is
firm near-term. Look for rotation higher to end about now-the next 24-36
hours. Rate clears close in stops again. Strong long-liquidation break is
still coming; Watch for two-way volatility. Short-covering rally stalled
where expected in the 1.5550/1.5600 area again; look to re-short in that
area now.

Data due Tuesday: All times EASTERN (-5 GMT)

Tentative EuroGroup Finance Ministers Meeting

USD/JPY Daily

Resistance 3: 104.80
Resistance 2: 10450/60
Resistance 1: 104.10/20
Latest New York: 103.92
Support 1: 102.50/60
Support 2: 102.00
Support 3: 101.80

Comments
Rally back from the Friday lows likely a Head-Fake; double -top has formed
and a strong sell signal suggests a potential short is now confirmed at the
105.00/50 area again. Rate has broken trend line support. Traders note that
the market continues to trade technically and expect stops to be run in both
directions near-term; expect more volatility. Looking for the rate to
briefly follow through higher for a short-covering rally through Tuesday but
fall harder into mid week; likely in the 10460/80 area. Day traders may get
a lot of opportunity as the rate will likely cover a lot of the same ground
twice on the hourly time frame. Stops could be in size at the 102.50/80
area. Resistance at 104.80 area remains significant now and rallies should
be sold.

Data due Tuesday: All times EASTERN (-5 GMT)

7:50pm CGPI y/y 3.6%
7:50pm Current Account 1.95T

Analysis by: Forexpros.com written by Jason Alan Jankovsky

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