The Dollar is finding mild pressure this morning, but has generally held within a tight trading range in front of today’s critical events that will finally put some near-term resolution on the Fed tapering question. A positive spin from today’s Housing Starts data may help to lift the Dollar clear of Monday’s monthly low, but any sort of extensive rebound will be held in check until the FOMC meeting results -and Fed Chairman Bernanke’s post-meeting comments – are fully digested by the market. While mixed results from recent US economic data has dampened market expectations, the Dollar appears to have priced in a $10 billion initial tapering of Fed asset purchases at today’s meeting. With the Dollar finding decent longer-term support just above the 81.00 level, the only surprise result that could bring significant pressure would be if the Fed totally avoids any tapering moves at today’s meeting. The Dollar may bounce back towards the 81.38 area after today’s Housing data, but will be waiting on the FOMC meeting results before making any decisive move away from these current price levels.
Technical Outlook
USD (SEP): The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. Momentum studies are declining, but have fallen to oversold levels. A negative signal for trend short-term was given on a close under the 9-bar moving average. The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negative with the close under the pivot. The next downside target is now at 81.08. The next area of resistance is around 81.43 and 81.59, while 1st support hits today at 81.18 and below there at 81.08.