Surprisingly the Dollar has started the Thursday US action on a slightly weaker track. One might haveexpected the Dollar to rise back toward its recent highs off ideas that the ECB might offer up additional stimulushints from the current meeting. In fact, seeing the US openly pressure the ECB to stimulate domestic demandearlier this week should be seen as a Dollar supportive development. Perhaps the Dollar is somewhat off balancebecause of its overbought technical condition, or perhaps some traders think that the FOMC meeting minutesyesterday afternoon weren’t hawkish enough. In any regard, the edge has to remain with the Dollar bulls, as aseries of scheduled data points later today, could further the macro economic optimism that was stoked byyesterday’s ADP figures. In fact, some traders expect to see a decline in a private layoff report this morning andthe trade also generally expects to see a slight decline in US initial claims. With the President yesterdaysuggesting that the US economy has turned the corner and the Dollar at the highs Wednesday, sitting roughly 1.8points above the December lows, the Dollar has already factored in a measure of positive progression in the USeconomy and that in turn might suggest the Dollar needs good numbers ahead just to hold above 81.00. While wecan’t rule out a return to the 81.33 high from yesterday, we might consider the purchase of some March DollarIndex puts on renewed strength later today.
Technical Outlook: Rising stochastics at overbought levels warrant some caution for bulls. Apositive signal for trend short-term was given on a close over the 9-bar moving average. Market positioning ispositive with the close over the 1st swing resistance. The near-term upside target is at 81.53. The next area ofresistance is around 81.38 and 81.53, while 1st support hits today at 81.03 and below there at 80.83.