The Dollar saw its dominance wane last week in the wake of discouraging data. The Dollar might comeunder further pressure in the event that US data remains weak this morning and or US Fed dialogue that tampsdown the prospect of unrelenting tapering ahead. While the Fed has recently suggested that their policy decisionsare made off domestic issues, sharp declines in equities, much softer than expected US manufacturing data andemerging market concerns have taken some of the edge off the Dollar’s bull case, that was present in the secondhalf of January. In the end, the pace of the US economy is paramount and even if the Fed remains hawkish in itsstatements today, soft regional manufacturing data could press the March Dollar Index to and below the 81.00level on the charts. In the event of a sweep of soft data and more dovish talk, a dive below 81.00 might beexpected. Underpinning the Dollar are early expectations of a non farm payroll gain of +170,000 for Friday, butgiven the flow of data recently, a 170,000 payroll gain might be seen as a solid payroll result, especially since thetrade is also expecting another downtick in the unemployment rate. For today, we see some initial correctiveaction early, but we expect support down at 80.90 to be pretty solid.
Technical Outlook: Momentum studies are trending higher from mid-range, which should support amove higher if resistance levels are penetrated. The market’s close above the 9-day moving average suggeststhe short-term trend remains positive. The market’s close below the 1st swing support number suggests amoderately negative setup for today. The next upside target is 81.52. The next area of resistance is around 81.29and 81.52, while 1st support hits today at 80.97 and below there at 80.87.