The Dollar enters the Friday US trade sitting just above the prior session’s downside breakout and thecapacity to temporarily recoil from the key March low of 79.375 is seen as a possible sign of a bottoming.However, for the Dollar to respect the recent lows and begin to build consolidation support probably requires aPPI result above +0.2% and it might also require more talk of stimulus action from the ECB. Other issues thatmight be providing some lift to the Dollar early today is noted weakness in European equities, weak UKconstruction output and the threat that Russia might use natural gas exports as a weapon against Europe. Inshort, the US economic outlook looks a little less severe in the face of slackening global views and talk of stimulusfrom the ECB and the PBOC. We aren’t overly interested in being long the Dollar, but being short the Dollar inexpectation of a sustained downside breakout seems to be a poor decision.
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.