The Dollar bulls have to be a little discouraged with the totality of the action in the Dollar over the last 24 hours. US scheduled data was strong enough (particularly from US GDP) to have fueled a charge in the Greenback into new high ground. Even more surprising is the lack of distinct upside extension in the Dollar this morning in the wake of fresh stimulus promises from the ECB’s Juncker. However, European shares have started out on a positive track on an improved Euro zone economic outlook perhaps because of the promise of QE or perhaps because of the bullish hype of positive equity market action. In looking ahead to the US scheduled data today, the US will see a rather active flow of scheduled data with initial claims expected to show minor growth early but that potentially supportive news could be countervailed by the US Durable goods report which is expected to be anemic. In short, the Dollar failed to rally yesterday off better than expected scheduled data and the Dollar only showed minimal gains this morning off more stimulus promises from the ECB. Therefore the Dollar appears to have forged a potentially significant topping action with the recent highs. Up-trend channel support in the December Dollar index is seen at 87.90 and that channel was violated in the early trade today. In short, there is a critical junction in the Greenback this morning through the data.
Technical Outlook: A crossover down in the daily stochastics is a bearish signal. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The market’s close below the 1st swing support number suggests a moderately negative setup for today. The next downside target is 87.52. The next area of resistance is around 88.22 and 88.57, while 1st support hits today at 87.70 and below there at 87.52.