After yesterday’s “relief” rally faded quickly, the Dollar is getting hammered this morning as prices havedropped down to the bottom area of the recent consolidation zone. While the government shutdown is over and apossible debt default avoided for now, the prospect that the US will go through this same drama in February whenthe debt ceiling comes back into play has likely taken any chance of Fed tapering off the table until early 2014, ifthen. This week’s limited selection of US data points have provided few positive highlights for the Dollar to findsupport from, and the latest Beige Book underscored the Fed’s outlook for “modest to moderate” growth thatprovides a further argument against near-term tapering. Today’s data is unlikely to give the Dollar much relief, asthe Philly Fed survey is expected to decline and the US government shutdown could lead to another surprisingInitial Jobless Claims reading. The Dollar should be able to survive a retest of the early October lows with theshadow of Washington budget problems lifted, but at this point it needs to find plenty of supportive evidence fromupcoming US data just to climb back towards this week’s highs. The Dollar will find near-term support around the79.92 area, and needs a vast improvement in sentiment in order to turn this sell off around.
Technical Outlook
USD (DEC): The moving average crossover up (9 above 18) indicates a possible developingshort-term uptrend. Momentum studies are trending higher but have entered overbought levels. A positive signalfor trend short-term was given on a close over the 9-bar moving average. The daily closing price reversal down isa negative indicator for prices. It is a slightly negative indicator that the close was lower than the pivot swingnumber. The near-term upside objective is at 81.06. The next area of resistance is around 80.79 and 81.06, while1st support hits today at 80.32 and below there at 80.11.