The Dollar forged yet another new high for the move overnight as the news of an on-hold Fed was clearly countervailed by the Fed’s press conference insinuation that once rates start to rise, they might rise morethan market players are expecting. Other issues that provide ongoing flow toward the Dollar is weak Chinesehome price data overnight, weak Swiss export data, fears of a split in the UK and a slightly disappointing reactionin the Pound following UK retail sales figures. One might also suggest that European LTRO action favors flowstoward the Dollar, as that action highlights the diverging policy directions between the US Fed and the ECB. TheDollar is also poised to benefit from US scheduled data flows ahead, with an expected decline in initial claims.However, estimates for a slight decline in Housing starts and permits could quickly dash the macro-economicdifferential edge that has been factored into the Dollar over the last 16 hours. Initial support in the DecemberDollar Index is seen down at 84.65 and then at 84.60 but the bull camp looks to generally retain control.
Technical Outlook: The market rallied to a new contract high. Daily stochastics turning lower fromoverbought levels is bearish and will tend to reinforce a downside break especially if near term support ispenetrated. The close above the 9-day moving average is a positive short-term indicator for trend. There could bemore upside follow through since the market closed above the 2nd swing resistance. The next downside target is83.83. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around85.14 and 85.39, while 1st support hits today at 84.37 and below there at 83.83.