Holiday Trading US Dollar Action

The USD continued in subdued holiday trade
today staying inside established ranges on low volumes; expected S/R areas
continued to limit trade. No real news on the blocks for the day along with
the absence of noted speakers kept traders basically sitting on their hands or
maybe executing a few customer transactions; when asked about the quality of
trade today one trader answered “It’s December 20th …” For the record, GBP
rallied into stops overnight above the 1.9720 area where some reported buying
by large US funds was seen but after a high print at 1.9751 the rate fell back
to open New York under pressure; traders note that any price above the 1.9720
area was a certain sell in these conditions.

EURO fared no better eventually trading to a
high print at 1.3245 during European trade but quickly gave up gains as GBP
fell; making lows on the day during New York to close weaker. USD/JPY had a
better showing finding good stops above the 118.30 area but exporters and
large names seen absorbing those bids keeping the rate pressured into New York
trade also; firm close in the 118.20/30 area was a bit of a surprise to some
but easily attributed to thin conditions. Tomorrow is US data due out early
with GDP forecast to be +2.2% final for Q3; traders expect little in the way
of a surprise and feel the number is well-factored in.

Philly Fed is up a bit later and a
lower-than-expected number may push the USD a bit lower but again, no one is
expecting the Greenback to reach any new significant numbers ahead of the
holidays. In my view, the USD is stuck in range until after the holidays are
finished; look for the majors to stay right about where they are for the next
ten days heading into the start of 2007. This is my last PM broadcast until
Jan.2, 2007 so I want to thank everyone for your support during the year. Have
a very merry Christmas and a safe New Year’s celebration. See you next year,
good luck and good trading.


R3: 8620

R2: 8600

R1: 8580

Current Price : 8549

S1: 8500

S2: 8450

S3: 8400

Low volume grind lower but holding potential
support from developing up channel change in trend, 50 bar MA also offering a
bit of support but with holiday conditions potential volatility could cause a
wash-out in both directions. In my view, cover longs at a loss as recovery
potential through the end of the week looks like the best to hope for is a
slight rally to the 8600 area.


R3: 1.3330

R2: 1.3290/1.3300

R1: 1.3250/60

Current Price : 1.3227

S1: 1.3200

S2: 1.3160/70

S3: 1.3150

Good support under the market but inverted
hammer suggests that today’s action will likely force a retest of the fib
defense area. Thin conditions not likely to help either side. If long, cover
and take what you have in my view, upside above 1.3300 area will likely be
labored until after the end of the year.

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