After seeing decent upside follow-through during overnight trading, the Dollar is starting to show signsof consolidation after one of the most vicious whipsaw market reactions in recent memory. The Fed’s decision totaper came with assurances from outgoing Chairman Bernanke that US rates would stay low for a long time tocome, so the ultimately positive reaction of US equities may have been the critical factor with the Dollar beingable to hold onto and build upon its post-announcement rally. While managing to recover almost all of this month’slosses in a matter of hours, the Fed’s show of confidence in an improving US economy may put even moreemphasis on upcoming US data points for sustaining this Dollar revival. Today’s US numbers need to postpositive results in order for the Dollar to hold its ground above its 50-day moving average, but a large-scaleretracement would be unlikely now that tapering is a “known” factor to the market. The Dollar should find neartermsupport around the 80.49 level, but at this point needs US data to back up the Fed’s confidence in the USeconomy.
Technical Outlook: The major trend could be turning up with the close back above the 60-daymoving average. The stochastics indicators are rising from oversold levels, which is bullish and should supporthigher prices. The close above the 9-day moving average is a positive short-term indicator for trend. The outsideday up is somewhat positive. There could be more upside follow through since the market closed above the 2ndswing resistance. The next upside target is 81.55. The next area of resistance is around 81.18 and 81.55, while1st support hits today at 79.98 and below there at 79.13.