The major pairs are on a down correction move, ironing out their previous heavily overbought situation against the USD. But there is also a fundamental reason for the loss of upward momentum.The USD is still caught in an inverse correlation with the stock markets. There is a reason for that inverse correlation. It is still widely believed that the U.S. economy will recover first, compared to Europe, and therefore will be the first to suffer inflation. We doubt that the inflation problem will happen soon though. There is a lot more behind a real inflation phase than just monetary and fiscal expansion.

For today`s trading, we expect the USD to gain some more strength, perhaps resulting later in the day in a sideways movement against the major pairs, as described in detail below. Note the U.S. first official estimate of the GDP for the third quarter. Expected is an improvement of at least 2%.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
On a a slight recovery move this European morning, the euro is trading currently at 1.4745 against the USD. We see this move limited at 1.4780 in today`s trading, which will probably be the turning point for another dive.

GBP / USD
Fighting hard to break the 1.6450 resistance this European morning, the pound is currently trading at 1.6445. We doubt that said resistance will be broken today and rather anticipate downmoves as far as 1.6330.

USD / CHF
On a down correction move in early European trading, the Swiss franc is priced right now at 1.0245 against the USD, down from a high at 1.0290. We expect the important 1.0300 resistance point to be broken on the upside today, leading to higher levels.

USD / JPY
Currently trading at 90.75 against the USD in early European trading, the yen has been on a recovery move since the late Asian hours' lows around 90.25. We do not see much of this recovery move going on today, and expect a sideways movement between the mentioned marks to set in.