The Dollar has been able to extend yesterday’s strong recovery move into this morning’s trading, but may be in search of a fresh source of strength in order to build further onto these near-term gains. While a positive reception for “flash” PMI data out of China and the Euro zone have dampened its safe-haven strength, the Dollar continues to benefit from a strong Existing Home Sales readings and the latest set of FOMC meeting minutes that provided fresh evidence that tapering is still very much on the market’s near-term horizon. The start of any Fed tapering will remain data-dependent, so the Dollar will clearly need to see strong US data this morning in order to sustain this current rebound, particularly from the Jobless Claims numbers as employment is likely to be seen as one of the Fed’s main gauges for any tapering decision. The Dollar may extend this current up move towards the 81.66 area after today’s US data is digested by the market, but it may need to see several strong
economic numbers before finding consistent upside momentum.
Technical Outlook
USD (SEP): The crossover up in the daily stochastics is a bullish signal. Daily momentum studies are on the rise from low levels and should accelerate a move higher on a push through the 1st swing resistance. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Market positioning is positive with the close over the 1st swing resistance. The next upside objective is 81.93. Consider buying pull-backs since daily studies are bullish. The next area of resistance is around 81.68 and 81.93, while 1st support hits today at 81.07 and below there at 80.69.