Not surprisingly, the Non-reportable Net Long position in the Dollar has hit a new record level at 14,674 contracts. Furthermore the positioning report as of December 30th for the US Dollar showed the Non-Commercial and Non-reportable combined traders held a net long position of 63,016 contracts. However, with the March Dollar from the COT mark-off date seeing additional gains of 150 points the long positioning in the Dollar is probably moderately understated. On the other hand, the fundamental case from the Dollar is patently and almost conclusively bullish and the fundamental flow is capable of dragging the Dollar even higher. In short, the Dollar is already seen as a one-way trade and rising expectations of a Greece exodus from the EU, combined with ideas that Russia, Europe and China might all be set to fall back into recession, suggests that fundamental expectations for the Dollar are almost signaling a perfect bull storm. With Bill Gross also suggesting overnight the Fed might not raise rates at all in 2015, one might also suggest that the interest rate differential argument in the Dollar is becoming almost completely one-sided. In conclusion, more gains in the Dollar but it might be time to consider purchasing long dated Dollar puts. Traders might consider buying Dollar futures and buying 3 June Dollar puts in hopes of financing a portion of the long put play with a near term continuation of Dollar gains.
Technical Outlook: The market rallied to a new contract high. Rising stochastics at overbought levels warrant some caution for bulls. The close above the 9-day moving average is a positive short-term indicator for trend. The gap upmove on the day session chart is a bullish indicator for trend. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside target is at 92.22. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 91.90 and 92.22, while 1st support hits today at 91.41 and below there at 91.23.