The Dollar is back to winning by default as UK inflation readings overnight were disappointing, thetrade is ramping up QE prospects from the ECB and there are calls for the Chinese to cut interest rates. In otherwords, the Dollar is generally thought to be better positioned economically than other regions and there is thelingering drag from Russian sanctions holding back the Euro zone. In fact, with the German central bankovernight predicting that the Euro zone is expected to grow even slower than they predicted earlier this year, it isclear that some economists think the Euro is destined for even more weakness relative to the Dollar. It is alsopossible that the Dollar is garnering some lift from expectations of strength in US housing starts and permits laterthis morning. The odds of an upside breakout in the Dollar are on the rise, but the bulls need help from USscheduled data to reach up to the highest level since late January.
Technical Outlook: Stochastics turning bearish at overbought levels will tend to support lower pricesif support levels are broken. The market’s short-term trend is positive on the close above the 9-day movingaverage. A positive setup occurred with the close over the 1st swing resistance. The next downside target is81.36. The next area of resistance is around 81.74 and 81.81, while 1st support hits today at 81.51 and belowthere at 81.36.