A pattern of higher highs and higher lows leaves the bull camp with a technical edge. For the time being the expectation of higher US rates later this year provides the bull camp with an ongoing fundamental edge. Surprisingly US scheduled data yesterday was a little suspect but the trade sifted through the results and gleaned a hotter than expected PCE reading as a signal that the Fed was still poised to act. With several Fed members recently trumpeting the prospects of a normalization of rates ahead, the currency trade might continue to discount
scheduled data flows from the US. Surprisingly the market has discounted strong German retail sales and stronger than expected Swiss growth results overnight because of entrenched bullish sentiment toward the Greenback. However, the US scheduled report slate today is somewhat active with a number of 3rd and 4th tier weekly private reports but the attention is really focused on this Friday’s Non-farm payroll release. For now, we leave the edge with the Bull camp and we would be surprised if the Dollar didn’t make an upside breakout into the Friday US report.
Technical Outlook: Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market’s short-term trend is positive on the close above the 9-day moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The nearterm upside target is at 95.87. The next area of resistance is around 95.73 and 95.87, while 1st support hits today at 95.28 and below there at 94.97.