The Dollar action of the last 24 hours has to be discouraging to the bull camp, as positive US data, arecovery in equities and the upcoming FOMC prospects failed to lift the Greenback. One gets the impression thatthe trade has moved to factor in a pause from the Fed on Wednesday, but it is also possible that the trade simplysees the Euro zone economy to be moving forward faster than the US economy. In fact, Euro zone car salesovernight managed to post a 6th straight monthly rise and that news might raise the bar on the US housing datalater this morning. The trade is expecting a rise in residential housing starts, but that reading is likely to becountervailed by a somewhat slack reading in housing permits. It is also possible that US CPI readings will be flatand that could leave the Dollar out of favor. We think the market is poised to continue to sell the rumor of a pausein US tapering.
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. Themarket’s close below the pivot swing number is a mildly negative setup. The next downside objective is now at79.10. With a reading under 30, the 9-day RSI is approaching oversold levels. The next area of resistance isaround 79.61 and 79.84, while 1st support hits today at 79.25 and below there at 79.10.