One has to think that the trade has factored in a moderate portion of a US Fed pause with the Dollardeclines of the last two months. However, while the Dollar is seeing some short covering action this morning, thedown trend is seemingly entrenched and it could be difficult for the Fed to alter the course of the Greenback.While most polls predict a standard tapering move later today, some players think that the Fed could double thepace of tapering and that would probably result in a compacted wave of short covering buying in the Dollar.However, we are not sure the Dollar down trend can be fully reversed by the Fed today, as a pause in taperingmight be seen as sign that the Fed sees more slowing in the economy ahead, while seeing a tapering move mightbe seen as adding to the headwinds facing the US economy. With the Chinese currency falling sharply this weekand the Dollar failing to catch a noted bid off that potentially significantly supportive situation, it is clear that theDollar is really out of favor and in need of something very significant from the Fed.
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.