While the market has avoided a retest of last Friday’s low for the move, the Dollar is showing few signsof putting together any extensive recovery at the start of this week’s trading. Lukewarm US data last week and a relatively quiet weekend news-wise has done little to move Fed tapering forward from a second quarter 2014start, which along with continued Chinese tightening is weighing on the Dollar this morning. There will be plenty ofUS economic numbers for the market to digest over the next few sessions, but the Dollar needs to string togethervery positive data points in order to generate upside momentum, and to overcome what is likely to be adisappointing FOMC meeting result later this week. Today’s Industrial Production number should provide a neartermboost with a positive result, but the Dollar’s upside will be limited unless the US economy can show signs ofconsistent strength from upcoming data. The Dollar may climb up towards the 79.42 level later today, but willhave little tolerance for any disappointment from key US economic data pointsduring the early part of this week. The Commitments of Traders Futures and Options report as of October 1st forUS Dollar showed Non-Commercial traders were net long 1,692 contracts, a decrease of 1,994 contracts. TheCommercial traders were net short 5,556 contracts, a decrease of 2,476 contracts. The Non-reportable traderswere net long 3,864 contracts, a decrease of 482 contracts. Non-Commercial and Non-reportable combinedtraders held a net long position of 5,556 contracts. This represents a decrease of 2,476 contracts in the net longposition held by these traders.
Technical Outlook
USD (DEC): The market was pushed to a new contract low. Daily stochastics are trendinglower but have declined into oversold territory. A negative signal for trend short-term was given on a close underthe 9-bar moving average. The daily closing price reversal up is a positive indicator that could support higherprices. The close over the pivot swing is a somewhat positive setup. The next downside target is now at 78.92.Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around79.42 and 79.56, while 1st support hits today at 79.10 and below there at 78.92.