The Dollar continues to grind its way higher this morning, although further gains are likely to be held in check until US economic data is heard from later in the day. While overseas developments have been the Dollar’s main source of strength early this week, there appears to be more of a “risk-friendly” atmosphere with global markets in the wake of positive data from Europe. This will put additional emphasis on today’s US Retail Sales data, as signs of forward progress will be critical for fueling hopes for near-term Fed tapering. The Dollar will clearly require more than one strong US data point to lift clear of these recent low price levels but with safe-haven support becoming a back-burner issue, the dollar will need to see strong domestic economic numbers in order to maintain upside momentum. The Dollar may climb up towards the 81.73 area after the US data window, and should be able to maintain a positive tone as long as global risk appetites remain subdued early this week.
Technical Outlook
USD (SEP): A bullish signal was given with an upside crossover of the daily stochastics. The stochastics indicators are rising from oversold levels, which is bullish and should support higher prices. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The next upside target is 81.81. The next area of resistance is around 81.64 and 81.81, while 1st support hits today at 81.21 and below there at 80.94.