After a sharp up move took prices up a new 11/2-month high during the overnight session, the Dollarhas seen a sizable pullback heading into this morning’s trading as this current recovery rally may have gottenahead of itself after 5 straight higher closes and the strongest weekly performance since early summer. Whilecomments by Fed President Fisher provided fresh fuel to last week’s hawkish shift in Fed tapering expectations,mildly positive data out of China and Europe has helped to take the steam out of the Dollar’s upside momentum.The Dollar is still in need of further reinforcement from the US data front in order to build onto recent gains, muchless strengthen a still-tenuous case for December Fed tapering, so this morning’s usually-volatile Factory Ordersreading needs to avoid any negative surprises in order for the Dollar to hold its ground in close proximity to lastnight’s high for the move. With a potential key reversal taking the Dollar back below its 50-day moving average, the Dollar may be vulnerable to further pressure this morning. The Dollar may find near-term support around the80.58 level, but looks to heading for much higher prices levels unless upcoming US data starts to take on anegative tone this week. The Commitments of Traders Futures and Options report as of October 22nd for USDollar showed Non-Commercial traders were net long 2,650 contracts, an increase of 1,718 contracts. TheCommercial traders were net short 6,423 contracts, an increase of 1,060 contracts. The Non-reportable traderswere net long 3,773 contracts, a decrease of 659 contracts. Non-Commercial and Non-reportable combinedtraders held a net long position of 6,423 contracts. This represents an increase of 1,059 contracts in the net longposition held by these traders.
Technical Outlook
USD (DEC): The major trend could be turning up with the close back above the 40-daymoving average. Positive momentum studies in the neutral zone will tend to reinforce higher price action. Theclose above the 9-day moving average is a positive short-term indicator for trend. The market has a bullish tiltcoming into today’s trade with the close above the 2nd swing resistance. The next upside objective is 81.25. The9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around81.09 and 81.25, while 1st support hits today at 80.55 and below there at 80.16.