The Dollar has once again ranged up and is approaching the early October highs. The gains areclearly the result of views that the US economy holds a macro-economic edge over most other key economiczones. Adding into the upward track in the Dollar is the added windfall this week of expectations that the US Fedwill be the first key central bank to hike rates, even if that rate hike is well into the future. Not all US scheduleddata has depicted growth this week, but the brunt of the numbers depicted growth with the 3rd quarter US GDPresult actually topping most expectations the economic edge in the Dollar lives on. The Dollar was given an addedboost in the wake of a surprising easing from the BOJ overnight and the Dollar was also boosted by news that theECB will start a fresh asset purchase program next week. We think the Dollar has become extensively overpriced,but it could take some time before the Euro zone shows growth and that leaves the Dollar with the near termedge. We suggest that traders sell an at-the-money December Dollar Index put and use that money to buy 2slightly out of the money March Dollar Index puts for a position play. On a further rally, time decay should eataway at the short Dec put leaving us short the Dollar through March Puts for the remainder of the 126 days untilthe March option expiration.
Technical Outlook: A positive indicator was given with the upside crossover of the 9 and 18 barmoving average. Rising stochastics at overbought levels warrant some caution for bulls. The market’s closeabove the 9-day moving average suggests the short-term trend remains positive. The close over the pivot swingis a somewhat positive setup. The near-term upside target is at 86.79. The next area of resistance is around86.49 and 86.79, while 1st support hits today at 85.99 and below there at 85.78.