The Dollar came back into vogue yesterday after the 80.00 level held and the US Fed floated somehawkish dialogue. Apparently the markets aren’t overly concerned that the US Fed is prematurely pulling back onstimulus and apparently the trade and Fed also think that the US slowing trend is a temporary situation. Some ofthe weakness in the Dollar into this week’s low was probably anticipation that the US Fed might hint at theprospect of a pause in tapering, but the reality was that the Fed was more hawkish than most traders wereexpecting. In fact, a few Fed members even suggested that rising rates might be possible later this year, but onecan’t give that angle too much credit, as one or two Fed hawks aren’t going to control the Fed. With US claimsexpected to decline later this morning and a gain in leaders expected, that might leave the Dollar with a weakupward bias. However, weakness in the Philly Fed Business outlook survey later in the session might temper therise in the Dollar. Near term upside targeting in the March Dollar index is seen up at 80.51 and support moves upto 80.36.
Technical Outlook: Momentum studies are declining, but have fallen to oversold levels. Themarket’s close below the 9-day moving average is an indication the short-term trend remains negative. The dailyclosing price reversal up is a positive indicator that could support higher prices. A positive setup occurred with theclose over the 1st swing resistance. The next downside target is 79.85. The next area of resistance is around80.40 and 80.50, while 1st support hits today at 80.08 and below there at 79.85.