While showing modest strength during Asian trading hours, the Dollar has fallen back on the defensiveand broke below the key 80.80 support level early this morning. A quiet weekend news-wise has kept Fed ViceChair Yellen’s Senate testimony on the front-burner, particularly with Friday’s sluggish US data readings adding tothe Dollar’s initially negative tone early this week. Today’s NAHB housing market index will need to at least matchlast month’s result, or further damage may be done to the case for a December Fed tapering. It may be left to Fedcommentary later in the session to provide the Dollar with some badly-needed support, as US longer-term yieldshave fallen well off of their recent highs and global risk sentiment continues to be on the mend after huge gains inChinese stocks last night. The Dollar may find support around the 80.56 level later in today’s session, and mayhave to wait from fresh “hawkish” Fed comments as well as for some stronger US data points in order to fullyregain upside momentum.
Technical Outlook
USD (DEC): Momentum studies are trending lower from high levels which should accelerate amove lower on a break below the 1st swing support. The market’s close below the 9-day moving average is anindication the short-term trend remains negative. The swing indicator gave a moderately negative reading with theclose below the 1st support number. The next downside target is 80.58. Short-term indicators on the defensive.Consider selling an intraday bounce. The next area of resistance is around 81.06 and 81.32, while 1st support hitstoday at 80.69 and below there at 80.58.