Afternoon US Dollar Wrap-Up

The USD firmed into New York trade today after
a very quiet overnight start in Asia. Heading into the close of European trade
the USD began to rally as traders continued to pressure Yen and the Yen
crosses eventually finding close-in stops. After the BOE announced no change
to interest rates traders sold GBP as rumors of a split at the MPC fueled
speculation that the BOE would not move rates for some time. Falling into
support around the 1.9600 area to start New York traders waited for the ECB
rate announcement and Trichet did not disappoint. Signaling a rate hike in
March by using the word “vigilant” the EURO rallied and scored highs on the
day with a high print at 1.3043, remaining firm all day. Dragging GBP
reluctantly higher on the news, cooler heads prevailed and traders kept the
major pairs range bound on the day.

USD/JPY rallied into stops at 121.30 are for a
high print at 121.46 on the day. Analysts note that the majors will likely
finish a bit firmer tomorrow as rumors around the G7 meeting continue to swirl
regarding JPY weakness. In my view, the USD is continuing to sketch out a
near-term top. Today’s action is really a no factor in my view and I am
looking for continued weakness near-term. For the next 24 hours expect solid
two way trade and the USD to open lower in New York.


R3: 1.9720/30

R2: 1.9680

R1: 1.9620

Current Price : 1.9577

S1: 1.9550

S2: 1.9500

S3: 1.9450

Rate lower on rumors/speculation suggesting
that sellers will have to cover if no follow-through Friday. Long tail on
today’s action also suggests sell-off is over done. Look for the rate to firm
into US trade overnight. Holding the 50 bar MA is significant so look for a
higher market next week as long-term traders go long after the G7 meeting is
out of the way.


R3: 8400

R2: 8380

R1: 8340

Current Price : 8306

S1: 8280

S2: 8250

S3: 8200

Rumors are driving shorts and most likely they
will cover on no follow-through Friday. Once G 7 is out of the way the rate
will likely build a base above the 8300 area near-term as the large overhang
of futures shorts at the IMM need to flushed. Look for a higher rate into New
York’s open Friday.

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