The Dollar remains off its recent highs in anticipation of some fresh stimulus from the ECB followingtoday’s meeting. In retrospect, US scheduled data flows have failed to meet lofty expectations but the data hasbeen strong enough to underpin the Dollar within close proximity to the recent highs. Traders expect some actionfrom the ECB but some of that might already be baked into the Dollar given the rise of the last three weeks.However, if the ECB fails to act as aggressively as the trade had hoped the Dollar will benefit significantly as thefear of ongoing deflation in the Euro zone will rekindle flows back into the Dollar. The focus of the trade today willbe private jobs reports (Challenger & ADP) as that will set the table for the Friday US monthly payroll event.However, the US will also release a flurry of other data points that in general must justify the 200 point run up inthe Dollar over the last month. In short, we think the trade has puffed up US economic expectations and to avoida peak in the Dollar today probably requires a positive spin from the numbers. We think longs in the Dollar shoulduse profit stops at 82.43.
Technical Outlook: The market rallied to a new contract high. Daily stochastics have risen intooverbought territory which will tend to support reversal action if it occurs. A positive signal for trend short-term wasgiven on a close over the 9-bar moving average. The downside closing price reversal on the daily chart issomewhat negative. It is a slightly negative indicator that the close was lower than the pivot swing number. Thenext upside target is 83.14. With a reading over 70, the 9-day RSI is approaching overbought levels. The nextarea of resistance is around 82.99 and 83.14, while 1st support hits today at 82.78 and below there at 82.72.