After lukewarm US economic data kept it under pressure earlier this week, the Dollar has found its footing coming out of the holiday break and is posting sizable gains this morning. The focus on overseas events has provided the catalyst for the Dollar’s recovery, particularly from the negative vibes coming out of the Euro zone and OPEC’s decision to keep their output quota intact that is weighing heavily on commodity prices. Recent US data may not be showing a robust economy, but the easier monetary policy signals coming out of Europe, China and Japan are likely to underpin the Dollar within its recent consolidation range. The Dollar is unlikely to see a sharp upmove beyond last week’s highs until next week’s critical Payrolls data is heard from, and with thin post-holiday conditions may be vulnerable to an end-of-week pullback. While the Dollar has been showing signs of being close to a longer-term top, it would take a significant change in tone in order to derail upside momentum heading into the weekend.
Technical Outlook: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The market back below the 18-day moving average suggests the intermediate-term trend could be turning down. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside objective is 87.22. The next area of resistance is around 87.96 and 88.30, while 1st support hits today at 87.43 and below there at 87.22.