Afternoon US Dollar Wrap-Up

The Greenback continued to soften today as
technical trade and position squaring ahead of the G7 meeting Friday dominated
trade today. Initially softer overnight against the majors, the USD/JPY
continued to draw support while other pairs rallied as trader’s debate the
near-term intentions of the BOJ. Likely to be a topic of discussion at the G7
meeting this weekend, news sources continue to report that the various finance
ministers will address Yen weakness. It is likely that traders have continued
to square Yen shorts against the USD today as the very large overhang of open
Futures shorts drag on the market; traders note that two attempts to find
stops under the 120.00 area have been met with bids but most of that is
technical analysts say suggesting that the rate will soon suffer a USD
correction. Near-term technical studies remain overbought for the USD/JPY and
the G7 communiqué over the weekend will likely draw some volatility.

GBP remained well-bid again today scoring a
high print at 1.9737 before offers came to the table but traders note that
with the absence of real economic news until next week the prospects for
Sterling remain range-bound. EURO also held established ranges but is flirting
with potential stops over the 1.3050 area as a high print at 1.3026 seemed to
be driven by stale shorts after stops were taken out above the 1.3000 handle
again today. EURO seems ready to push into the 1.3100 area near-term in my
view so pullback s are best for a “but the dip” strategy. In my view, today
was a simple rotation higher into technical resistance for the majors; expect
a pullback but underlying conditions remain bullish in my view. For the