Forex - Dollar rose on Tuesday help by higher Stock Exchange and cautious optimism on the 700mio bailout plan later this week.

Forex News and Events: The Dollar surged on Tuesday and was on track to post its best quarter versus the euro since 1992, buoyed by quarter-end deals and hope that US lawmakers could still agree to some rescue package for the financial sector. Talk that the US Congress may reach some kind of deal by the end of the week, and speculation that central banks could cut interest rates eased risk aversion, with US stocks rebounding after Wall Street on Monday experienced its biggest one-day sell-off in 21 years. The Dollar was also on course for its strongest quarter against the British pound and the Swiss franc since 1992. EurUsd dropped as low as 1.4009 and ended down 1.8% to 1.4120. UsdJpy rose as high as 106.50, reversing previous day losses at a four-month low at 103.55. It was last up 1.95% at 106.02. UsdChf jumped 2.41% to 1.1194 having touched an intraday peak of 1.1248. GbpUsd was down 1.03% at 1.7831. It touched a session low of 1.7758. The Euro's woes were worsened by news of the bailout of Belgian-French financial services group Dexia by the governments of Belgium, France and Luxembourg. That came after Monday's part-nationalization of Belgian bank Fortis. The Sterling was also hurt as events continued to highlight the international impact of the banking crisis. Banks in Britain, Belgium, Russia, Iceland and the United States have been rescued by authorities this week. Cautious optimism that US lawmakers would eventually come to some agreement after Monday's shock rejection of the government $700bio bailout plan gave the Dollar some steam and powered stocks on Wall Street higher.

Today's Key Issues (time in GMT): 00:00 TRY Market Holiday in Turkey and Hong Kong 06:00 EUR August German Retail Sales 3.1% vs -1% (mom) 06:00 EUR August German Retail Sales -3% vs 0.6% (yoy) 06:30 SEK September PMI Manufacturing 42.3 vs 46.3 (mom) 07:15 EUR September PMI Manufacturing 38.3 vs 42.4 07:30 CHF September PMI 47.8 vs 52.5 07:30 DKK August Retail Sales -6.9% vs -4.1% (yoy) 08:00 EUR September Euro-zone Markit Manufacturing PMI 45.3 vs 47.6 08:30 GBP September CIPS/Markit Manufacturing PMI 45 vs 45.9 09:00 EUR August Euro-zone Unemployment rate 7.3% vs 7.3% 10:00 EUR McCreevy news conference on changes to banks’ capital rules, Brussels 12:15 USD September ADP National Employment -60k vs -33k 12:30 USD August Core PCE price index 0.2% vs 0.3% (mom) 14:00 USD August Construction spending -0.5% vs -0.6% 14:00 USD September ISM Manufacturing PMI 49.5 vs 49.9

The Risk Today: EurUsd This early week weakness below 1.4250 did put the focus on 1.3882 11th September initial support and next strong support 1.3666 December 2004 high. A break lower will open the way to 1.3056 support (retracement of 0.8231 – 1.6039 advance). On the upside, only a return over 1.5000 and 1.5500 will release actual pressure and may put key initial resistance 1.6000 into focus. Still a break up there would open the way to Trendline resistance 1.6200. Initial resistance holds 1.4867 22nd September high. GbpUsd Friday 1.8669 high marked the end of the mid-September uptrend. This week weakness below 1.8324 (23.6% retracement of 2.1161- 1.7447 decrease) may open the way to 1.7447 11th September low and may test 1.7422 (50% retracement of 1.3682 – 2.1161 advance). Strong support holds 1.7251 3rd April low. On the upside, initial resistance holds 1.8669 Friday high ahead of 1.8795 21st August high strong resistance holds. UsdJpy Early this week, Market return with strong volatility posting 103.50 to 107 trading range. Further advance will put 110.67 15th August high. Or renewed pressure below 103.50 initial support may open the way to 101.45 support (61.8% retracement of 95.75 – 110.67 advance), as 100 pivot point. UsdChf Market rose 2.41% yesterday. It posted 1.1248 high, only 170pip away from 1.1418 11th September high. Further advance may open the way to 1.1596 December high. On the downside, only weakness below 1.0692, 22nd September low, would undermine the current trend and open the way down to 1.0500 and 1.0375. Such a move may also test the 1.0013 15th July low in front of 0.9637 17th March low. Initial resistance holds 1.1280 19th September high ahead of 1.1418 11th September trend high. Strong resistance holds 1.1593 December 2007 high.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.5280 K 2.0100 K 110.67 T 1.1593 S 1.5000 P 1.8795 S 109.18 M 1.1418 T 1.4250 M 1.8668 M 107.00 M 1.1280 M 1.4155 1.7850 106.20 1.1170 1.3882 M 1.7735 M 105.00 P 1.0692 S 1.3666 S 1.7422 S 103.54 S 1.0500 K 1.3056 T 1.7251 S 100.00 P 1.0013 P S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot