The Dollar spent most of the overnight trade below 86.00 but it was still within close-proximity to the recent highs. It is possible that news of a fresh US Ebola infection has undermined the Dollar to start but wesuspect that the Dollar is also garnering some support from news of somewhat disappointing UK growth and fearsof this weekend’s EU bank stress tests results. Another issue that might be undermining the Dollar is expectationsfor a decline in US new home sales later this morning. With the return of US Ebola headlines, a slightlyoverbought Dollar technical condition and weakness in US equities to start, the bear camp looks to have a slightedge. Initial support is seen at 85.85 and then again down at 85.75 but we doubt that the Dollar is going to be fullyput out of favor today, unless the home sales result is worse than expectations which already call for a 5-6%decline.
Technical Outlook: Momentum studies are trending higher from mid-range, which should support amove higher if resistance levels are penetrated. A positive signal for trend short-term was given on a close overthe 9-bar moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. Thenear-term upside objective is at 86.21. The next area of resistance is around 86.09 and 86.21, while 1st supporthits today at 85.80 and below there at 85.63.