After showing some corrective action over the last 24 hours the Dollar has at least partially balanced itsoverbought technical condition and for some it has also balanced its fundamental condition. However,expectations for US claims later this morning call for a slight rise and that could keep Dollar buyers on thesidelines. On the other hand, expectations of further easing from the ECB later this morning is likely to be themost dominating influence on the Dollar this morning. From past history, traders should expect the ECB to drag itsfeet and avoid aggressive asset purchases, which in turn could leave the Dollar up trend largely in place. With arise in claims and a decline in US manufacturing shipments for August also expected later today, we can’t rule outa temporary retest of critical support down at 85.59.
Technical Outlook: Daily stochastics turning lower from overbought levels is bearish and will tend toreinforce a downside break especially if near term support is penetrated. The market’s short-term trend is positiveon the close above the 9-day moving average. It is a slightly negative indicator that the close was lower than thepivot swing number. The next downside target is now at 85.65. The 9-day RSI over 70 indicates the market isapproaching overbought levels. The next area of resistance is around 86.20 and 86.45, while 1st support hitstoday at 85.81 and below there at 85.65.