The Dollar has managed to remain in vogue despite some US data this week that some might consider to be disappointing. However, fears of even more slowing in the Euro zone, weakness in emerging marketcurrencies and ideas that the US Fed can act quicker and more definitively than other central banks, leaves theDollar as the safe harbor in a world of deflationary signals. A sharp slide in crude oil prices yesterday wasreportedly partly the result of the unattractiveness of US oil relative to Brent crude and that is really the firstnegative signal seen from the unrelenting sharp rise in the Greenback. However, the Dollar will see a test laterthis morning with the release of ADP payroll data which is expected to see a slight rise from the reading lastmonth. Other critical data from the US today will be seen from Construction Spending (a slight rise is expected)and ISM Manufacturing (which is expected to have notched lower). Given the bullish sentiment toward the Dollar,it could take 2 weaker than expected data points from the US today just to dent the ongoing rise in the Dollar. Infact, some players are already anticipating an upward revision in last month’s Non-farm payroll reading on Fridaymorning.
Technical Outlook: The rally brought the market to a new contract high. A crossover down in thedaily stochastics is a bearish signal. Daily stochastics turning lower from overbought levels is bearish and will tendto reinforce a downside break especially if near term support is penetrated. The market’s short-term trend ispositive on the close above the 9-day moving average. A positive setup occurred with the close over the 1st swingresistance. The next downside objective is 85.30. The market is approaching overbought levels with an RSI over70. The next area of resistance is around 86.39 and 86.72, while 1st support hits today at 85.69 and below thereat 85.30.