Despite the lack of serious fundamental news the USD whipsawed today taking out stops on both sides today. Initially weaker overnight the Greenback rallied a bit on follow-through buying but ran into ample supply as Yen-crosses dominated trade forcing USD longs to take a breather for a bit. After US data was out the USD rallied against the Yen breaking into stops above the 109.30 area for a high print at 109.75 before dropping back. Most of the USD pairs rallied with the Yen but once stocks declined and oil rallied a bit the luster wore off the Greenback and the majors began to recover.

Making a fresh US high late in New York EURO rallied through stops at the 1.4940 area for a return to the higher ranges seen overnight. Traders note that the big stops to protect the shorts start around the 1.4990/1.5000 area and perhaps a little higher. The rate will no doubt make a run for those as EURO now looks like a reversal is in the works. Cable had another break lower as the bears would not quit just yet making a low print at 1.8638; almost a two-year low. With conditions dramatically weaker now in the US than they were in 2006 it makes you wonder where this USD strength is coming from.

Most traders are looking for the Greenback to fade near-term and point to the technically oversold readings as a clue that a rally is due. Non-USD crosses for Sterling were also whipsawed suggesting that the market is full of late traders who are likely to get spanked.

In my view, this morning's additional romp higher against GBP as well as the other pairs later in the day is simply evidence of a reactionary market and not an orderly one. Today's USD data was not favorable to the Greenback and the whipsaw during the day points to a market driven by emotion rather than reflecting market conditions. Once the weak traders are scared out the USD will likely resume a steadier pace of regular depreciation near-term. Look for consolidation tonight and US data to be unfriendly in the morning.

Today's US Dollar Trading

•           USD whipsaws hard
•           Volumes patchy
•           GBP falls to new lows

Overnight Preview

•           USD likely to consolidate
•           Volumes likely to drop ahead of US data tomorrow

Looking Ahead
All times EASTERN (-5 GMT)

•           8:30am USD Core CPI m/m
•           8:30am USD CPI m/m
•           8:30am USD Unemployment Claims
•           10:35am USD Natural Gas Storage
•           2:30pm USD FOMC Member Stern Speaks

Forex Analysis by Jason Alan Jankovsky at ForexPros.com. For more details about Forex Trading and Tips for decent earnings through Forex Trading, Please check http://www.forexpros.com