The Dollar spiked down sharply yesterday but recovered impressively from that washout in the wake ofthreats from EU officials that a soaring Euro wouldn’t be tolerated. Some traders think that the rise in the Euro isincreasing the prospect of fresh stimulus efforts, especially if the EU plans to enforce stiff sanctions on Russiabecause of its annexation of the Crimea. While US economic data this week has been somewhat supportive, themarket apparently needs stronger data to justify a flow toward the Dollar. With expectations of a +0.2% rise in PPIreadings later this morning and a slight rise in Michigan Consumer sentiment expected, the Dollar might be ableto hold near the overnight highs, especially if EU officials float more dialogue designed to deflate the Euro beforethe European close.
Technical Outlook: The market was pushed to a new contract low. Daily stochastics declining intooversold territory suggest the selling may be drying up soon. The close below the 9-day moving average is anegative short-term indicator for trend. The market’s close below the pivot swing number is a mildly negativesetup. The next downside objective is 79.12. The next area of resistance is around 79.79 and 79.95, while 1stsupport hits today at 79.38 and below there at 79.12.