The Non-reportable Net Long position in the Dollar has hit a new record level at 13,491 contracts, with the December 9th report also putting the combined Non-Commercial and Non-reportable net long position in the Dollar at a lofty 49,528 contracts. Some will suggest that the correction last week balanced the overbought condition of the Dollar and some might suggest that the mid-December slide in the Dollar is partly the result of ideas that global deflation pressures might result in the Fed leaving its policy statement unchanged on Wednesday afternoon. With a higher start in US equities, a looming Fed meeting and a full slate of US scheduled data ahead that could set the tone for the entire week in the Dollar. However, the Dollar bulls need to see generally positive data this morning or the expectation of a hawkish Fed statement might be reduced further and the March Dollar might fail below critical close-in support of 88.35.
Technical Outlook: Declining momentum studies in the neutral zone will tend to reinforce lower price action. The close below the 18-day moving average is an indication the intermediate-term trend has turned down. The market’s close below the pivot swing number is a mildly negative setup. The next downside target is now at 88.05. The next area of resistance is around 88.85 and 89.15, while 1st support hits today at 88.30 and below there at 88.05.