The U.S. dollar's two month rally suddenly came into question yesterday with a decline that took the Greenback lower by over 100 pips against the world's major currencies. Factors that contributed to this decline involve profit taking in long-dollar positions due to the BOE and ECB rate decisions today as well as tomorrow's all-important U.S. Non-Farm Payroll report.

We feel the dollar may continue to correct its recent advance today and tomorrow but the real test will come either late Friday after the U.S. Non-Farm Payroll report or when trading resumes on Monday. It is our opinion that currency traders are simply using the interest rate announcements today and tomorrow's U.S. employment report as an excuse to take profits and next week we expect the dollar to return to rally mode.


Intraday Market Outlook for Day Traders

EUR / USD
The EUR / USD rebounded further in early European trading and is currently at 1.4525. We see the upper limit of the upmove at the important 1.4550 level for today. Downward volatility then might set in once the ECB’s monetary policy is published (13:45 CET).

GBP / USD
Cable is undergoing some further upward correction this European morning and, after having tested resistance at 1.7850, is currently trading at 1.7820. We expect the 1.7850 level to hold in today’s trading with the lower end of the trading range at 1.7750.

USD / CHF
After having broken the 1.1100 handle support, the dollar is trading currently at 1.1027 against the Swiss franc, near rock-solid support. We expect the 1.1000 handle to hold in today’s trading and see some recovery moves up to 1.1070 materializing.

USD / JPY
The yen is again following its own path, with the dollar in an upmove against it, and is currently trading at 108.40. We expect the present up momentum to continue slowly in today’s trading, towards the 108.70 level.