While the Dollar is showing initial positive action today, it remains moderately below the prior twosession’s highs. Lingering concern toward the economic track in China provides some lift to the Dollar, whilesomewhat positive German employment news overnight undermines the Dollar through some fresh long interestin the Euro. However, with the Euro zone posting negative PPI data overnight, the trade probably sees theEuro/US interest rate differential to be supportive of the Greenback. On the other hand, some traders look back tothe US data mix on Monday and suggest that the US economy is still uneven and that in turn could limit the MarchDollar Index below the 81.00 level today as the US economic report slate is somewhat thin. In fact, with US Tradedata the only noted release today, it could be difficult for the Dollar to come away from the morning trade withclear a push above the 81.00 level. On the other hand, seeing the March Dollar close above the 81.00 level couldclearly kick up technically related buying interest again in the Dollar. Pushed into the market we would considerthe purchase of a March Dollar Index put, or we would sell the Dollar on a rally to 81.06. A long term down trendchannel resistance line is seen in the March contract up at 81.04. The Commitments of Traders Futures andOptions report as of December 31st for US Dollar showed Non-Commercial traders were net short 4,302contracts, a decrease of 407 contracts. The Commercial traders were net long 312 contracts, a decrease of 30contracts. The Non-reportable traders were net long 3,988 contracts, a decrease of 379 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 314 contracts. This represents adecrease of 28 contracts in the net short position held by these traders.
Technical Outlook: Daily stochastics have risen into overbought territory which will tend to supportreversal action if it occurs. The close above the 9-day moving average is a positive short-term indicator for trend.The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negativewith the close under the pivot. The next upside target is 81.23. The next area of resistance is around 81.00 and81.23, while 1st support hits today at 80.61 and below there at 80.46.