The Dollar seems to have regained its footing overnight in the wake of more slack economic views toward the German economy. In fact, weak German data has cast enough fresh doubt on the forward progress ofthe European economy to foster expectations of fresh stimulus from the German central bank. Despite fresh newhighs for the move late last week in the Dollar and generally positive US monthly payroll data, the Dollar appearsto have run into a fundamental and technical barrier. While some might suggest that US growth is likely to bepulled downward in the wake of the weaker IMF world growth projections, a more significant impediment tostraight away Dollar gains is the developing “market concept” that a rising Dollar is starting to hit profits at USmultinational companies. It is also possible that the Dollar is starting to be second guessed by growing fears thatthe US Fed’s hawkish stance might be premature. While it is trading against an established trend, aggressivetraders might consider the purchase of November Dollar 86 puts for 80 points today, hoping for a failure ofsupport down at 85.60 later this week.
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 negative as the close remains below the 9-daymoving average. The market’s close below the pivot swing number is a mildly negative setup. The next downsideobjective is 85.28. The next area of resistance is around 86.05 and 86.43, while 1st support hits today at 85.48and below there at 85.28.