The Dollar has recovered overnight and has accomplished that action in the face of rising hopes of anECB easing move later this week. While reports of slightly better than expected Chinese manufacturing datacould have held back the Greenback, weak Japanese auto sales and slightly weaker than expected German andEuro zone May Manufacturing PMI results have left the Dollar with an edge. Another issue providing some buyinginterest to the Dollar is a prediction from a Fed member late last week, that the US will complete its taperingefforts by the end of this year! However, the bullishness toward the Dollar from the Fed dialogue was mitigated bysuggestions from the Fed’s Evans that US rates increased probably wouldn’t be seen until 2015 or 2016.Therefore the Dollar trade will be watching US manufacturing PMI, Construction Spending and ISM Manufacturingreadings later this morning for confirmation of forward motion in the US economy. The Commitments of TradersFutures and Options report as of May 27th for US Dollar showed Non-Commercial traders were net short 653contracts, an increase of 382 contracts. The Commercial traders were net short 4,902 contracts, a decrease of 93contracts. The Non-reportable traders were net long 5,555 contracts, an increase of 290 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 4,902 contracts. This represents adecrease of 92 contracts in the net long position held by these traders. Initial resistance is seen up at 80.61 butthe bull camp looks to have the edge.
Technical Outlook: The daily stochastics have crossed over down which is a bearish indication. Dailystochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especiallyif near term support is penetrated. The market’s short-term trend is positive on the close above the 9-day movingaverage. The market setup is somewhat negative with the close under the 1st swing support. The next downsidetarget is now at 80.24. The next area of resistance is around 80.51 and 80.62, while 1st support hits today at80.32 and below there at 80.24.