The Dollar bulls have to be discouraged by the action this week as prices remain tilted to the downsidedespite some positive US data, gains in US equities and declines in US Treasuries. In fact, the Dollar hasremained weak this morning despite slack data flows from The Euro zone overnight. When one considers theprospect of another Fed $10 billion in tapering to be announced on Wednesday afternoon, it is clear that theDollar remains in a downward posture on the charts. In addition to a private home price survey to be releasedlater today, the markets will also see US Consumer Confidence readings and with both of those reports expectedto post supportive economic data, we suspect that the Dollar has become fundamentally oversold with this week’searly losses. While the Non-farm payroll report will probably serve to lift the Dollar later this week we ultimatelyfear that report will be a sloppy and that the Dollar might weaken again after the Friday numbers are released.The bears maintain control but the risk and reward of being short has become much less attractive. Pushed intothe market over the coming 24 hours we would be long from the initial lower levels forged on the charts.
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.