Although it has been unable to sustain an overnight rally that broke out above the July/Novemberdowntrend, the Dollar is only finding moderate pressure early this morning. Given the recent comments from FedChairman Bernanke and Fed Vice Chair Yellen, the FOMC meeting minutes came across as mildly hawkish andhave helped the Dollar underpin recent gains. Weak “flash” PMI readings from China and France have also beena source of strength, but the Dollar will need to get past this morning’s set of US economic data before it canregain any strong upside momentum. A December Fed tapering may still be a remote possibility even at thispoint, but the Dollar is going to need to see strength at home as well as sluggishness overseas in order to climbabove and beyond the early November highs. The Dollar may rise up towards the 81.20 level, and will be lookingfor positive US data results in order to climb all the way back towards the overnight highs.
Technical Outlook
USD (DEC): The major trend could be turning up with the close back above the 60-daymoving average. Stochastics trending lower at midrange will tend to reinforce a move lower especially if supportlevels are taken out. The market’s close above the 9-day moving average suggests the short-term trend remainspositive. The outside day up is somewhat positive. The market has a bullish tilt coming into today’s trade with theclose above the 2nd swing resistance. The next downside target is now at 80.35. The next area of resistance isaround 81.40 and 81.62, while 1st support hits today at 80.77 and below there at 80.35.