After another new high for the move overnight the Dollar has seen some modest profit taking. We think the Dollar is rich and priced for macro-economic perfection relative to scheduled economic data. However, the promise of more rate cuts from China and expectations of even more easing from the ECB ahead probably leaves the Dollar in the driver’s seat for the near term. The US scheduled report slate is active today with a Chicago Fed National Activity Index, a Services PMI release and a Texas manufacturing report. We think that US numbers have to be positive to extend the Dollar index rally above the overnight highs of 88.51. Up-trend channel support in the Dollar isn’t seen until the 87.63 today but that support line rises to 87.70 on Tuesday. The Commitments of Traders Futures and Options report as of November 18th for US Dollar showed Non-Commercial traders were net long 39,009 contracts, a decrease of 2,251 contracts. The Commercial traders were net short 50,403 contracts, a decrease of 2,326 contracts. The Non-reportable traders were net long 11,393 contracts, a decrease of 75 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 50,402 contracts. This represents a decrease of 2,326 contracts in the net long position held by these traders.
Technical Outlook: The market rallied to a new contract high. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The outside day up is somewhat positive. Since the close was above the 2nd swing resistance number, the market’s posture is bullish and could see more upside follow-through early in the session. The next downside target is 87.21. The next area of resistance is around 88.85 and 89.15, while 1st support hits today at 87.89 and below there at 87.21.