The bull camp got a surprise lift from a residential home sales result yesterday that bucked the recenttrend of weak US housing data. While some think that the data result was suspect, the macro economic focustoday will clearly hinge on the US durable goods release, which is expected to be down 2%. The impact of thedurables might be partially muted because of the Yellen testimony to Congress later this morning. One has toexpect some minor weakness in the wake of the early US data flow, but the currency trade is probably content towait to see if the Fed’s tone has become a little more dovish because of the extension of adverse weather and agrowing string of softer than expected US data results. Therefore it is not surprising to see the March Dollar Indexreturn to the middle of the last months trading range into the Fed testimony today. However, it is telling for theDollar to be higher this morning in the face of the lowest German unemployed tally in 16 months and the highestItalian business confidence tally in 30 months! Therefore a portion of the trade must think Yellen is likely to staythe course with prospects of more tapering. We don’t think the Dollar will bottom until all of the data from theJanuary and February time frame is known. However, a rally off Yellen this morning might be seen back toresistance of 80.745.
Technical Outlook: The daily stochastics gave a bullish indicator with a crossover up. Rising fromoversold levels, daily momentum studies would support higher prices, especially on a close above resistance. Theclose above the 9-day moving average is a positive short-term indicator for trend. Since the close was above the2nd swing resistance number, the market’s posture is bullish and could see more upside follow-through early inthe session. The next upside objective is 80.82. The next area of resistance is around 80.66 and 80.82, while 1stsupport hits today at 80.23 and below there at 79.97.