While there has been modest follow-through from Friday’s key reversal, the Dollar is clearly lackingstrong upside momentum at the start of the new trading week. Relief that the US government shutdown hasfinished for now has not translated into any sustained Dollar strength, as the prospect of fresh conflict when thedebt ceiling deal runs out early next year will likely keep Fed tapering off the table until then. This morning’sExisting Homes Sales reading could provide a boost to the Dollar if the number exceeds expectations, but furthergains are likely to be held in check until the market digests tomorrow’s critical Non-Farm Payroll reading. TheDollar has a long road ahead to repair chart damage sustained over the past few months, much less find anysignificant revival of safe-haven support, as any weakness in US data or less-than-hawkish Fed commentary willnot be received well by the market. The Dollar may grind its way up to the 79.93 level later in today’s session, andneeds to see consistently positive US data points to overcome tapering disappointment and hold its ground abovethe recent levels.
Technical Outlook
USD (DEC): The market was pushed to a new contract low. The moving average crossoverup (9 above 18) indicates a possible developing short-term uptrend. Declining momentum studies in the neutralzone will tend to reinforce lower price action. The market’s short-term trend is negative as the close remainsbelow the 9-day moving average. The market tilt is slightly negative with the close under the pivot. The nextdownside target is 79.42. The next area of resistance is around 79.82 and 79.95, while 1st support hits today at79.55 and below there at 79.42.