While the Dollar is higher early this morning we are surprised that the Greenback isn’t into fresh new highs for the move again. With the EU lowering its 2015 growth forecasts and inflation readings the Euro zonecontinues to fight against definitive deflationary conditions, and therefore the Dollar retains the macro-economicand interest rate differential edge. Falling oil prices rekindles the deflationary bias and that typically meansinvestors and traders seek the safety of the Dollar off the relative confidence of the US Fed relative to other lessactive central banks. Other headlines adding into the Dollar edge this morning is news of a weak UK constructionPMI result and suggestions from German leadership that Russian sanctions need to remain in place because ofthe situation in Ukraine. Corrective support in the December Dollar is seen down at 87.12, while a longer term uptrend channel support line is seen at 86.53 today.
Technical Outlook: The market made a new contract high on the rally. Momentum studies aretrending higher but have entered overbought levels. A positive signal for trend short-term was given on a closeover the 9-bar moving average. It is a mildly bullish indicator that the market closed over the pivot swing number.The next upside target is 87.80. The market is approaching overbought levels with an RSI over 70. The next areaof resistance is around 87.65 and 87.80, while 1st support hits today at 87.24 and below there at 86.98.