A fruitless weekend in Washington gave the Dollar fresh headwinds at the start of the new tradingweek, although prices were able to hold their ground after making an early retest of Friday’s low. There is stillsome residual optimism that US lawmakers will come to some sort of an agreement before the debt ceiling comesinto play later this week, but the current US government shutdown will continue to limit US economic data pointsthat might have helped the Dollar find fresh support. Fed tapering looks to be off the table until the DecemberFOMC meeting – if then – which will also make it difficult for the Dollar to regain upside momentum as long asWashington fiddles over their budget problems. Unless overseas risk concerns start to displace DC newsheadlines as a source of direction, the Dollar’s upside will remain limited at best. The Dollar could bounce back tothe 80.56 level later this morning, but any large-scale up side move will have to wait until there is clear evidencethat both sides in Washington are on the same page with ending the US government shutdown and avoiding abreech of the debt ceiling.
Technical Outlook
USD (DEC): Momentum studies are trending higher from mid-range, which should support amove higher if resistance levels are penetrated. The market’s close above the 9-day moving average suggeststhe short-term trend remains positive. The market tilt is slightly negative with the close under the pivot. The nextupside target is 80.77. The next area of resistance is around 80.64 and 80.77, while 1st support hits today at80.37 and below there at 80.21.