Afternoon US Dollar Wrap-Up

At the close of today’s trading the USD ends
the week mostly lower against the majors. Although today’s PPI was highly
anticipated to be the catalyst for a modest rebound as traders took this weeks
testimony by Fed Chair Bernake as being USD supportive as well as today’s
comments by Chicago Fed Chair Moskow; the greenback was unable to build on
solid gains seen yesterday as two-way trade continued from overnight. Next
weeks’ economic calendar is light here in the US and overseas the BOJ holds
their policy meeting Tues/Weds so traders likely lightened up on positions
heading into the three-day weekend here in the US. Monday is Presidents day
and most of the US markets will be either closed or trading shortened hours.
This afternoons early close at the IMM left the USD drifting for hours after
the London fix; all things considered the week ended around 8:00 AM CST today
after release of PPI and Housing Starts. The GBP gave back the most from
recent gains falling all the way back under the 1.9480 area of near-term
support for a low print at 1.9462 before bids lifted the rate back into the
1.9500 handle.

Traders note that volumes were lighter and
volatility may have been larger due to the long weekend in the US. EURO
remained firm at 1.3100 area, low print there in sympathy with the break in
cable at 1.3093 well above rumored stops at the 1.3060 area near-term; traders
say that the EURO likely has more upside in it and will challenge reported
stops at the 1.3160/80 area soon. USD/JPY continued to sell-off for a low
print at 118.97 before staging a modest rebound. A “doji” star close for
Friday suggests the rate may rotate back into resistance early next week but
threats of BOJ rate hikes are supporting the Yen well. Stops under the 118.80
are said to be heavy and technically the USD/JPY has a major hurdle to
overcome next week; today’s close marks an outside bar engulfing reversal
pattern on the weekly charts. Very bearish in my view. Look for the USD to
consolidate losses and remain two-way through Wednesday as all eyes will be on
the BOJ rate announcement. US CPI will likely be a yawner next week but
selling rallies in USD will remain the preferred strategy.

EURO/USD Daily

R3: 1.3230

R2: 1.3200

R1: 1.3180

Current Price : 1.3153

S1: 1.3120

S2: 1.3080

S3: 1.3050/60

Rate closes with odd hanging man formation
suggesting that more follow-through lower is expected. Close over 50 bar MA
for third day is mildly bullish and likely will encourage the bulls on breaks.
Look for two-way trade the next 24-48 hours ahead of Japan data. Traders
watching the crosses I think.

USD/JPY Daily

R3: 8480/90

R2: 8450/60

R1: 8420/30

Current Price : 8416

S1: 8400

S2: 8380

S3: 8350

Pair encountering regular and expected
resistance at the 50 bar MA and prior S/R; a pull back on low volume ideal for
another potential push into higher stops rumored to be resting in the 8480 are
and layered to 8550. Offers said to be layered as well so expect solid two-way
action and two-way trade near-term.


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