The Dollar has managed to find moderate support early in today’s trading, but at this point will need a positive reception to US housing data early in the session and FOMC meeting minutes later on in the day in order to build upon this modest upside momentum. There is some tangible risk-aversion in global markets that is working to the Dollar’s benefit, but the market will need to get past today’s events without Dollar sentiment getting derailed once again by negative domestic news. A lack of “top-tier” US numbers this week and mixed results late last week have clouded the tapering debate, which will make this afternoon’s FOMC meeting minutes a critical factor in whether recent Fed commentary will be backed up by near-term action. A pick-up in the rate of Existing Homes Sales should provide the Dollar an early boost this morning, but any chance for a decisive rally away from this month’s lows will need the FOMC meeting minutes to strengthen, much less reinforce near- term Fed tapering prospects. The Dollar may climb up to the 81.23 area this morning after the US data window, but is likely to remain relatively subdued until this afternoon’s FOMC minutes release.
Technical Outlook
USD (SEP): Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. A negative signal for trend short-term was given on a close under the 9-bar moving average. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. The next downside objective is now at 80.40. The next area of resistance is around 81.24 and 81.61, while 1st support hits today at 80.64 and below there at 80.40.