The Dollar appears to have discounted the surprise decline in US initial claims yesterday and in turn isseemingly rushing to factor in another disappointing reading on jobs. Some traders are suggesting that part of theslide in the Dollar is the result of hope that weak data is poised to result in a pause of tapering by the Fed thismonth! However, given the prospect of a large February employment report impact and the slew of softer thanexpected US data released over the last 6 weeks, one probably can’t rule out a temporary downside extension ofthe March Dollar to the next critical consolidation low of 79.38. On the other hand, one can clearly suggest thatthe Dollar has a fairly large portion of a weaker than expected Non farm payroll result factored into prices.
Technical Outlook: A crossover down in the daily stochastics is a bearish signal. Momentum studiesare still bearish but are now at oversold levels and will tend to support reversal action if it occurs. A negativesignal for trend short-term was given on a close under the 9-bar moving average. The defensive setup, with theclose under the 2nd swing support, could cause some early weakness. The next downside target is now at 79.17.The next area of resistance is around 79.98 and 80.40, while 1st support hits today at 79.37 and below there at79.17.