In spite of another dysfunctional day in Washington, the Dollar is only finding moderate pressure earlythis morning as the market has remained well inside of Tuesday’s trading range. While the October 17th debtdefault “deadline” is now less than 24 hours away, there is still enough optimism left in the market that somehow,someway, US politicians can put a budget deal together that the Dollar has managed to hold onto a decentportion of Tuesday’s rebound. This optimism also helped the Dollar shake off a lukewarm reading from the NYFed’s Empire State survey, although the market may not be as generous if the NAHB Housing index or the BeigeBook also produces disappointing results. At this point, it will be very difficult for the Dollar to climb above thisrecent consolidation zone without a budget deal being signed, sealed and delivered, but as long as there arepositive vibes still coming from Capitol Hill, its downside will remain limited at best. The Dollar may find supportaround the 80.36 level later today, but another fruitless day out of Washington is unlikely to be taken as well bythe market.
Technical Outlook
USD (DEC): Stochastics are at mid-range but trending higher, which should reinforce a movehigher if resistance levels are taken out. The cross over and close above the 18-day moving average indicates theintermediate-term trend has turned up. The market setup is supportive for early gains with the close over the 1stswing resistance. The near-term upside objective is at 81.04. The next area of resistance is around 80.82 and81.04, while 1st support hits today at 80.37 and below there at 80.13.