The Dollar ranged up sharply yesterday and that might have left it temporarily overbought. However,the Dollar is mostly expecting to see support from upcoming data and therefore one has to wonder if the marketshaven’t set an overly optimistic bar for the Greenback. With a private jobs forecast yesterday pegging only aminimal increase in jobs over last month, US claims later today expected to decline by a miniscule amount andthe Non-Farm payrolls on Friday not expected to match last month’s rise, we have to wonder if a portion of thestellar gains in the Dollar over the last 2 1/2 months leaves the Dollar vulnerable. However, the fundamental trendin the Dollar is entrenched and foreign competition is virtually non-existent and it is usually not advisable to tradeagainst the trend. In conclusion, we expect the potential for a blow off top in the Dollar ahead and or erosion fromthis week’s highs after the Friday payroll news is factored.
Technical Outlook: The rally brought the market to a new contract high. Daily stochastics have riseninto overbought territory which will tend to support reversal action if it occurs. The market’s short-term trend ispositive on the close above the 9-day moving average. With the close over the 1st swing resistance number, themarket is in a moderately positive position. The next upside objective is 88.13. The market is approachingoverbought levels with an RSI over 70. The next area of resistance is around 87.88 and 88.13, while 1st supporthits today at 87.21 and below there at 86.80.