The Dollar has remained weak despite potentially supportive Chinese economic data over theweekend and ongoing escalation of tensions in the Ukraine. Even more surprising is that better than expected USdata from Friday has only resulted in a modest bounce in an extremely oversold market. In retrospect, the Dollarappears to have reached an oversold condition as it rejected the probe below 79.50 on Friday but as long as theDollar remains below 80.00 some traders might consider the Greenback out of favor. Fundamentally, we woulddiscourage pressing the short side of the Dollar after the Non-Farm Payroll results, especially if more normal USweather brings forth a release of pent up consumer activity. Another issue that might provide some lift to theDollar is talk of another tapering move, as the markets at times over the last two weeks, were “off” the Marchtapering band wagon because of the string of soft US data. We don’t necessarily like the long side of the Dollar,but we think the risk of being short the Dollar is rather significant. The Commitments of Traders Futures andOptions report as of March 4th for US Dollar showed Non-Commercial traders were net short 757 contracts, anincrease of 500. The Commercial traders were net short 5,379 contracts, a decrease of 1,009 contracts. The Nonreportabletraders were net long 6,136 contracts, a decrease of 508 contracts. Non-Commercial and Nonreportablecombined traders held a net long position of 5,379 contracts. This represents a decrease of 1,008contracts in the net long position held by these traders.
Technical Outlook: Momentum studies are declining, but have fallen to oversold levels. A negativesignal for trend short-term was given on a close under the 9-bar moving average. The upside closing pricereversal on the daily chart is somewhat bullish. It is a slightly negative indicator that the close was under theswing pivot. The next downside objective is now at 79.27. The next area of resistance is around 79.91 and 80.09,while 1st support hits today at 79.51 and below there at 79.27.