Without the benefit of overseas developments to provide a source of strength, the Dollar has founditself back on the defensive this morning as the market made an early retest of near-term support just above the80.60 level. With US longer-term yields sliding this week, the Dollar is in need of consistently strong US datapoints in order to bolster the case for a December Fed tapering. Although the Dollar was able to overcome asluggish Pending Home Sales number yesterday, it will not be as lucky this morning as today’s US housing andsentiment readings will go a long way towards determining near-term direction. Strong results this morning wouldclearly be a positive factor for the Dollar but until the market hears more commentary from Fed officials, abreakout above the July/November downtrend may be a bit too much to ask. The Dollar should find near-termsupport around the 80.67 level, and needs to avoid any negative surprises out of this morning’s US data in orderto hold its ground above the recent lows.
Technical Outlook
USD (DEC): Declining momentum studies in the neutral zone will tend to reinforce lower priceaction. The market now above the 18-day moving average suggests the intermediate-term trend has turned up.The daily closing price reversal up is a positive indicator that could support higher prices. With the close higherthan the pivot swing number, the market is in a slightly bullish posture. The next downside objective is 80.53. Thenext area of resistance is around 81.15 and 81.30, while 1st support hits today at 80.77 and below there at 80.53.