After the transaction is relatively flat in the hours before the opening of New York, the U.S. dollar strengthened as sentiment turned back toward safety. Late yesterday and overnight, the dollar seems ready to weaken as demand for higher-risk assets began to pick up.

In the early trading session, the news began to leak about Greek debt concerns caused the U.S. stock market to sell sell. The release star less than U.S. economic reports triggered additional selling pressure as investors pared positions in anticipation of capital markets economic slowdown. This confused traders who then began to sell assets at higher prices while seeking safety in U.S. Dollars.

EUR USD continued to weaken throughout the session as taking sell stops below the psychological 1.40 level. Selling pressure today was triggered by news that the Greek budget woes have come back. For several days, the traders had become complacent while under the belief that the issuance of new bonds will make the problem go Greek debt. 1.3800 remains the most likely downside target.

British pound traded lower but still within the range of five days. It's hard to say at this point which direction the investor prefers. Fear, and demand for lower risk tends to push the market lower.

Demand for safer assets helped turn CAD JPY lower. At the beginning of the session, the dollar versus the yen shouts after completing 50% retracement and the closing price reversal down. A sell-off in U.S. equity markets, however, sent traders struggled to safety, sending USD JPY lower.

Overbought conditions and take advantage, helping to push the USD CAD early, but sell-off in U.S. equity market sentiment changed risk, triggering intraday reversal. Looking for Canadian dollars to feel the pressure as long as investors continue to avoid risk. Low crude oil and gold also contributes to the strength in the USD CAD.

USD CHF conducted early gains after the rally last night to take the market higher this month through December at 1.0507. New primary base has been established at 1.0367. This market is fast approaching overbought status and correction can begin at any time. Note the closing price signal for the formation of reversal. This pattern is not possible today unless the risk sentiment shifted away from safety.

The intraday break in the U.S. equity markets triggered a break from the high AUD USD as traders dispose of assets at risk. A similar situation developed in CAD EUR as traders become more risky refused and decided to re-enter the short side of the market or lose to liquidate long positions.

[ take from forexhound.com]