The expected downward correction of the USD, as a reaction to its sharp upmove that ended 2 weeks ago, has not appeared and trading is in a consolidation phase within a broader trading range. A shortage of dollars in the overnight money markets (still somewhat gummed-up in the wake of financial crisis) may be the explanation for the Greenback strength.

Now with the USD at its upper end of the said trading range and short-term overbought, we see a chance in today’s trading to sell the USD, especially against the euro. See the description in the major pairs below. Note today’s data release of U.S. Industrial Production and U.S. Capacity Utilization, both for September, at 15:15 CET.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
The EUR / USD just tested the lower end of its longer-term broad trading rnge at 1.3350 and is currently in an upmove, priced now at 1.3480. We expect this upmove to continue in today’s trading, at least to 1.3550. Right now, a downward correction to support at 1.3420 can set in.

GBP / USD
Cable fell back further in Asian trading, testing a low of 1.7132, and recovered in early European hours to its current 1.7258. We expect further recovery moves, possibly from today’s support level at 1.7220, up to resistance at 1.7340.

USD / CHF
The dollar continues to trade against the Swiss franc in a range between 1.1450 at the upper and 1.1290 at the lower end and is currently priced at 1.1350. We see the USD testing the lower end at 1.1290 again today.

USD / JPY
Following its downward correction move, the dollar recovered against the yen this European morning and is currently trading at 100.24. We see the upside being limited at 100.60 in today’s trading and expect testing of support at 99.40.