The Dollar enters the Wednesday trade action sitting just below the recent consolidation high zone in amove that suggests some players are tempering their bets on a hawkish Fed result later today. With a statementrelease at 2:00 PM eastern time from the Fed and a press conference to follow, traders should brace for a trendsignaling event. We just don’t think the US economy has the momentum for the Fed to be proactive unless theFed knows that the last monthly non-farm payroll report will be revised higher. We are even more confident thatthe Fed lacks the inflation pressure to alter their guidance especially when one considers the slowing anddeflation pressures being seen outside of the US. With the ECB, PBOC and BOJ in the midst of additional easingand or stimulus, a hawkish Fed move today would be working at cross purposes to the effort to get the worldeconomy on a solid growth track. Pushed into the currency markets we would favor the downside in the Dollarbetting on a status quo from the Fed. However, given the all or nothing prospect of the Fed decision today, wouldbebears might consider purchasing October Dollar 84 puts for 40-50 ticks.
Technical Outlook: Momentum studies are trending lower from high levels which should accelerate amove lower on a break below the 1st swing support. The market’s short-term trend is negative as the closeremains below the 9-day moving average. The swing indicator gave a moderately negative reading with the closebelow the 1st support number. The next downside target is 83.75. The market is approaching overbought levelswith an RSI over 70. Daily studies pointing down suggests selling minor rallies. The next area of resistance isaround 84.46 and 84.72, while 1st support hits today at 83.98 and below there at 83.75.