USD Mid-day Analysis

The short term technical overbought condition of the Dollar was significant into this week’s highs. We would also suggest that the Dollar was also fundamentally overextended and therefore that might raise the bar for upcoming US scheduled data. In other words it could become increasingly difficult for the Dollar to discount disappointing US data as traders are assuming clear-cut US macro-economic dominance. With initial claims, retail sales and Import/Export prices all scheduled for release today traders might expect a noted reaction in the Dollar following the data today. Expectations for claims call for a modest decline but a reading that remains above 300,000, Import/export prices are expected to post modest gains and Retail sales are expected to post modest gains of +0.2%. Up-trend channel support in the March Dollar today is seen down at 98.23 and without weaker than expected US data we would not expect the Dollar up-trend to end this morning.

Technical Outlook: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market’s close above the 2nd swing resistance number is a bullish indication. The near-term upside objective is at 101.53. The 9-Day RSI over 90 suggests the market is extremely overbought. The next area of resistance is around 101.02 and 101.53, while 1st support hits today at 99.52 and below there at 98.52.