The Dollar has become over extended from a technical and fundamental perspective. Better than expected Chinese manufacturing data probably served to prompt some profit taking in the Greenback which tothe highs yesterday had mounted a 100 point 5 day rally. Some suggest that the Dollar is seeing some longliquidation in the wake of news that it has begun air strikes against Syria. However, slack Euro zonemanufacturing data released this morning should underpin the Dollar which should find a measure of supportaround a recent consolidation low zone of 84.33. Uptrend channel support in the December Dollar Index is seentoday at 84.35 but a recent fall off in volume and open interest might suggest that traders have balked at buyingthe Dollar above the 84.18 level.
Technical Outlook: The market made a new contract high on the rally. Momentum studies aretrending higher but have entered overbought levels. The market’s short-term trend is positive on the close abovethe 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative. It is amildly bullish indicator that the market closed over the pivot swing number. The near-term upside objective is at85.13. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around84.96 and 85.13, while 1st support hits today at 84.64 and below there at 84.48.