A modest boost of safe-haven support has helped the Dollar find its footing after reaching a fresh 81/2-month low, but the market is making little headway with recovering from the damage sustained after Tuesday’sUS jobs data. Disappointing Non-Farm and Private Payroll readings for September have solidified a marketconsensus that any Fed tapering moves have been pushed back well into 2014, and quickly evaporated anyunderlying support earned from the Dollar’s grinding rebound from last Friday’s lows. Overnight news of potentialChinese bank problems may be dampening global risk appetites but at this point, the Dollar is clearly playing”third-string” to the Yen and Swiss Franc as a safe-haven destination. With the prospect of October US data likelyto be negatively impacted by the US government shutdown, the Dollar will have little margin for furtherdisappointment from this week’s upcoming US data points or from dovish comments by Fed officials. The Dollarmay extend today’s key reversal up towards the 79.52 area if a “risk off” mood gains additional momentum, butfurther upside will be limited as long as Fed tapering measures remain well off in the future.
Technical Outlook
USD (DEC): The market broke to a new contract low. A negative indicator was given with thedownside crossover of the 9 and 18 bar moving average. Daily stochastics are trending lower but have declinedinto oversold territory. The market’s short-term trend is negative as the close remains below the 9-day movingaverage. The market is in a bearish position with the close below the 2nd swing support number. The nextdownside target is 78.80. The market is approaching oversold levels on an RSI reading under 30. The next areaof resistance is around 79.60 and 80.04, while 1st support hits today at 78.99 and below there at 78.80.