We view the Dollar as suspect after taking in this week’s action. Given somewhat positive data yesterday, an impressive but temporary recovery in equities and renewed global deflationary panic this week, the Dollar has not come back into vogue as might have been expected. However, it is difficult to abandon the Dollar as a safe haven harbor with escalating fear of trouble in Russia, slowing fears in China and residual turmoil in Greece. Again it is telling that the Dollar peaked and slid consistently after it saw a much stronger than expected US monthly Non-farm payroll result last week. Up-trend channel support in the December Dollar index is seen down at 88.02 and with the prospect of a negative PPI result (-0.1%) later this morning, the path of least resistance in the Dollar might remain down directly ahead.
Technical Outlook: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The upside closing price reversal on the daily chart is somewhat bullish. Market positioning is positive with the close over the 1st swing resistance. The next downside target is 87.89. The next area of resistance is around 89.28 and 89.59, while 1st support hits today at 88.43 and below there at 87.89.