Despite the suggestion from the Fed that tapering will continue and hints that US housing trouble andgeopolitical tensions will restraint the recovery pace in the US, the Dollar remains vulnerable on the charts. Inshort, the Fed’s Yellen secured the bear tilt in the Dollar by indicating that the US economy still needs lots ofsupport. In reality anything short of a moderate decline in US claims later this morning, is likely to rekindle a slidein the Dollar to the lowest levels since October of 2013 especially as Yellen also indicated the US labor marketretains “significant slack”. In the end, even a global risk on vibe probably adds to the downward track in the Dollar.While hints of easing from the ECB (not widely expected) might temporarily stall the slide in the Dollar, the path toa reversal of the entrenched downtrend in the Dollar must be cleared by stronger US data.
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.