While the Dollar was knocked back from its recent highs in the wake of discouraging monthly payroll results the downside in the Greenback might be limited because of slack Chinese inflation readings, increasedfighting in the Ukraine and the fear of even slacker Euro zone data ahead. In fact, fear of discouraging EU data isaccentuated by talk that the ECB is poised to provide more QE despite internal doubt on the effectiveness of thatstimulus tool. Significant declines in Italian industrial output readings come in just ahead of data that willdetermine if Germany can effectively avoid a technical return to recession with its growth figures. In short theDollar might sage to complete its technical balancing but US data was probably good enough for the Dollar toretain its leadership role. Up-trend channel support in the December Dollar stands at 87.21. Pushed into themarket we would be a buyer of the dollar on dips as the US retains a global macro-economic differential edge.The Commitments of Traders Futures and Options report as of November 4th for US Dollar showed Non-Commercial traders were net long 42,356 contracts, a decrease of 7,718 contracts. The Commercial traders werenet short 54,015 contracts, a decrease of 4,904 contracts. The Non-reportable traders were net long 11,659contracts, an increase of 2,815 contracts. Non-Commercial and Non-reportable combined traders held a net longposition of 54,015 contracts. This represents a decrease of 4,903 contracts in the net long position held by thesetraders.
Technical Outlook: The rally brought the market to a new contract high. Momentum studies aretrending higher but have entered overbought levels. The market’s short-term trend is positive on the close abovethe 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative. It is aslightly negative indicator that the close was lower than the pivot swing number. The near-term upside target is at88.55. The next area of resistance is around 88.01 and 88.55, while 1st support hits today at 87.25 and belowthere at 87.01.