A higher high overnight in the Dollar was seen off residual global slowing fears, news of a 5 year low inChinese inflation and the ideas that plummeting oil prices signal a return to global recession. However, significantdeclines in oil prices should ultimately become a stimulus but in the short term the symptom of declining oil pricescontributes to growth fears. So far, the trade hasn’t openly embraced a push back in US rate hike timing but thatrefrain has been seen from at least 2 US Fed members this week! On the other hand, the path of least resistanceor trend in the Dollar remains up because of a complete lack of alternatives. With US retail sales figures later thismorning expected to come in soft, we have to think that the December Dollar will have trouble holding above the86.00 level, especially if Empire State Manufacturing results later on decline as expected! It is also possible thatan “under-shoot” of September PPI expectations that call for a +0.1% gain could undermine the Dollar’s bullstatus. It is very difficult to trade against the up-trend in the Dollar, but we really advise against adding to longpositions in the Greenback.
Technical Outlook: Momentum studies trending lower at mid-range could accelerate a price break ifsupport levels are broken. The market’s close above the 9-day moving average suggests the short-term trendremains positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture.The next downside target is now at 85.18. The next area of resistance is around 86.21 and 86.41, while 1stsupport hits today at 85.60 and below there at 85.18.