The U.S. dollar's spectacular rally yesterday has come to a rest as traders digest this move and the market consolidates the dollar's overbought levels. In our opinion, if the dollar can hold these higher levels throughout today's trading, it will be well-positioned to resume its rally tomorrow and on Friday.

The only question mark will be Friday's U.S. non-farm payroll numbers which has the ability to move the dollar up or down.

Intraday Market Outlook for Day Traders

EUR / USD
After yesterday’s steep decline in the EUR / USD, a downtrend for the currency pair has been confirmed. Currently, the EUR / USD is trading at 1.5453 and has been trading in a very tight range of 1.5410 to 1.5480 overnight in the Asian and early morning European sessions. We feel the EUR / USD will soon test major support at 1.5284. We don’t think any major movement will come before Friday’s U.S. payroll numbers and advise traders, if they must take positions, to trade from the short side.

GBP / USD
The GBP / USD is currently trading at 1.9551. The dollar’s new-found strength, coupled with Sterling’s inherent weakness, makes this currency pair a good short bet. We would take short positions only after prices in the GBP / USD have recovered a bit from their oversold level. We would take short positions over 1.9580 for a target of 1.9460 support, which we feel will be tested perhaps today or tomorrow. Stop at 1.9645. See chart below.

USD / CHF
Volatility in the USD / CHF has been quite low recently and currently the USD / CHF is trading exactly at 1.0400. We don’t feel that movements in this currency pair are sufficient at the moment to warrant any positions.

USD / JPY
The recent rise in the USD / JPY yesterday towards a high of 105.60 placed the currency pair in an overbought situation from which it has now retraced and is currently trading below 105.00 at 104.77. Prices could even reach 104.30 in today’s trading as the market continues to recover from its overbought levels. At these lower prices, a new USD / JPY rally is quite likely but we do not expect that to happen in today’s trading.

GBP / USD Chart

GBP / USD