While the Dollar is showing signs of correcting in the early Friday morning action, the Greenback remains within striking distance of its contract highs ahead of the US payroll release. The trade is expecting tosee a US non-farm payroll result above the +200,000 level but some might suggest that given the Dollar’s stellargains this week that expectations for the US number is actually north of +225,000! However, some of the gains inthe Dollar were the result of the somewhat surprising rate cut move from the ECB and therefore some of the gainsshould hold regardless of the US results. In fact, seeing Euro zone 2nd quarter GDP growth come in unrevised at0.0% would seem to leave a very low bar in place for today’s US data. Given the breakneck gains in the Dollarthis week we expect to see some measure of corrective back and fill in the Dollar unless the non-farm payroll gaincomes in above +225,000. Some economists are expecting a decline in the unemployment rate and a rise inhourly earnings and that news should help to check up any short term technical balancing effort.
Technical Outlook: The market made a new contract high on the rally. Rising stochastics atoverbought levels warrant some caution for bulls. The close above the 9-day moving average is a positive shorttermindicator for trend. The market’s close above the 2nd swing resistance number is a bullish indication. Thenear-term upside target is at 84.63. With a reading over 70, the 9-day RSI is approaching overbought levels. Thenext area of resistance is around 84.33 and 84.63, while 1st support hits today at 83.31 and below there at 82.58.