The opening call in most Forex markets - with the exception of the Japanese Yen - was higher as European and Asian traders must have been anticipating a strong rally from the get-go in U.S. equity markets. When this rally failed to materialize, the Dollar strengthened. Despite a recovery in the equity markets into the close, the inability to rally the higher risk Forex markets to their highs for the day is an indication that the selling may be greater than the buying at current levels. If the stock market is topping, then look for demand to drop for higher risk assets. This should lead to greater demand for safe haven assets.

The EUR USD closed higher on Monday but still below the June high at 1.4337. The strongest buying came from the overnight trade as a weaker U.S. stock market put pressure on the Euro most of the day. Equity traders seemed at little hesitant at high levels today, indicating that demand for higher risk assets may be diminishing.

The British Pound showed some resilience today following last week's reversal top at 1.6585. The current chart formation suggests a secondary lower top formation which can trigger an acceleration to the downside. Fundamentally the U.K. economy is still showing signs of weakness. In addition there are concerns about the U.K. government's ability to fund its huge budget deficit.

The uptrend continued in the USD JPY following last week's change in trend. Strength in the stock market waned a bit today but failed to bring buyers into the Japanese Yen. Traders could be looking for more solid evidence of a top in the equities before buying the Yen.

The USD CAD tested the low for the year at 1.0783 but failed to break through to the downside. At times it looked as if traders wanted to reverse the pattern to up but buyers failed to materialize. A top is the equity and crude oil markets will likely trigger a closing price reversal bottom formation so be careful not to get caught short.

The late session rally in the equity markets allowed the AUD USD to maintain its bullish pattern. The close near the high has this market in a position to test the high for the year at .8264. It is going to take another rally in the equity markets to drive this market higher, however.

Although the NZD USD closed higher, it appears to be making a top. Despite another new high for the year in the equity markets, traders seemed hesitant to buy the New Zealand Dollar at current levels. This divergence with the Aussie could be indicating a short-term top.

The weaker Dollar could not drive the Swiss Franc through the recent bottom in the USD CHF at 1.0590. Traders may be hesitant to initiate selling at the low end of the range because of threats of an intervention by the Swiss National Bank.